Find Legal Information

Opinion Information Sheet

			

       IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

SHARON HANKS, an individual,                )       NO. 66071-3-I
                                            )
                      Respondent,           )       DIVISION ONE
                                            )
       v.                                   )       PUBLISHED OPINION
                                            )
JAMES and JEANNIE GRACE, and                )
the marital community comprised             )
thereof; EASTSIDE BROKERS, INC.,            )
d/b/a/ RE/MAX EASTSIDE BROKERS,             )
a Washington limited liability company, )
                                            )
                      Appellants.           )       FILED:  April 2, 2012
                                            )

       Leach, A.C.J.  --  Sharon Hanks brought suit against her realtor and his 

wife, James and Jeannie Grace (Grace), alleging professional negligence, legal 

malpractice, fraud, breach of contract, and a Consumer Protection Act1 violation.  

Grace appeals from a jury verdict in Hanks's favor.  Grace contends that Hanks 

waived her claims by signing a rescission contract containing an exculpatory 

clause, that the trial court improperly denied his motion for summary judgment, 

and that the trial court erred by denying his CR 50 motion for judgment as a 

matter of law.  Under the facts of this case, the exculpatory clause violates public 

policy, the release is void, and the trial court properly concluded that Hanks did

not waive her claims against Grace.  Procedural bars prevent Grace from raising 

       1 Ch. 19.86 RCW. 

NO. 66071-3-I / 2

his remaining claims on appeal.  We affirm.

                                        FACTS

       On March 1, 2008, Hanks listed her house in Sammamish for sale for 

$538,000 with Grace and RE/MAX Eastside Brokers.  At the time, Hanks's 

husband was terminally ill. Hanks planned to move to South Dakota after his 

death to be closer to her family.  Hanks told Grace that she would not entertain 

contingent offers.  The listing agreement provided that Grace would receive a 

two percent commission for his services as listing agent, which would increase 

to three percent if he also acted as the selling agent.

       In early  March,  a  prospective purchaser,       Robert Alia,    expressed  an 

interest in Hanks's house to Grace, but Alia did not make a written offer.  

Instead,  on March 10, Alia  made an offer on a different house in Hanks's 

neighborhood.  That same day, Grace presented Hanks with a written offer of 

$530,000   from Robert and Norma Jean Grimes.               The Grimeses      expressly 

conditioned their offer upon a satisfactory inspection and their ability to obtain 

financing.  Hanks accepted the Grimeses' offer.

       Grace then removed the "for sale" sign in front of Hanks's house without 

objection and changed the status of the house with the multiple listing service to

"pending inspection."   After the Grimeses approved an inspection, he changed it 

to  "pending."    Apparently unbeknownst to Hanks, the Grimeses'              offer was 

                                           -2- 

NO. 66071-3-I / 3

contingent on the sale of their house.2  

       The purchase fell through when the Grimeses could not sell their house 

and as a result could not obtain financing.3        Grace then offered to purchase 

Hanks's house.  Grace asked Hanks to rescind the REPSA that she had entered 

into with the Grimeses.  Grace prepared a rescission agreement that provided 

for the return of the Grimeses' earnest money to them and also contained an 

exculpatory clause, releasing Grace "from any and all present or future liability."

       In June, the sale to Grace fell through because Grace, like the Grimeses, 

could not obtain financing.  Hanks terminated her listing agreement with Grace 

and retained a different listing agent.  By that time, the real estate market had 

significantly declined, forcing Hanks to reduce her asking price several times.  

Hanks's house eventually sold in September 2009 for $380,000, $158,000 less 

than the original asking price.  Hanks sued Grace, alleging professional 

negligence, legal malpractice, fraud, breach of contract, and a Consumer 

Protection Act violation. 

       The record demonstrates  that the parties disagree sharply about what 

occurred during the time that Grace acted as Hanks's listing agent.  The first 

       2 However, the real estate purchase and sale agreement (REPSA) was 
not expressly conditioned on the sale of the Grimeses' house.  While Grace 
included a "Financing Addendum" to the REPSA, he failed to append "Form 
22B," the "Buyer's Sale of Property Contingency Addendum."  
       3 Grace also acted as the Grimeses' listing agent.
                                           -3- 

NO. 66071-3-I / 4

area of dispute centers on Alia, the individual who expressed an interest in 

Hanks's house but did not make an offer.  Alia testified that he told Grace he 

wanted to make a full-price, noncontingent offer on Hanks's house, and Grace 

responded that Alia's timing would not work for Hanks.  Grace testified that Alia 

refused to make a written offer.  According to Hanks, Grace never told her about 

Alia's desire to make an offer, and if he had, she would have accepted it.  

       The parties' recollection of events also differs regarding the Grimes offer.  

According to Hanks, Grace told her that the Grimeses were "financially well 

qualified." Hanks also said that Grace did not indicate to her that their offer was 

contingent upon the sale of their home.  Grace, however, recalls alerting Hanks 

to the contingent nature of the offer.

       Finally, the parties dispute what occurred at the signing of the rescission 

agreement.  Grace remembers that he "went over the form with [Hanks]."           Hanks, 

on the other hand, did not recall Grace explaining the terms of the agreement to 

her.  She testified Grace told her that the rescission agreement was a formality 

and that she had to sign it so that Grace could buy her house.

       Grace moved to  dismiss  Hanks's negligence claims                 on summary 

judgment, arguing Hanks had waived them by signing the rescission agreement.  

In the alternative, Grace asked the trial court to limit Hanks's damages to one-

half of the Grimeses' $5,000 earnest money.  The trial court decided that Grace

                                           -4- 

NO. 66071-3-I / 5

owed Hanks no legal duty to prepare a written offer for Alia; it also determined

that material issues of fact regarding Hanks's other claims precluded summary 

judgment.4

       Hanks moved for partial summary judgment to dismiss Grace's  waiver 

defense based upon the rescission agreement.  The trial court granted this 

request:

       The release at issue in the facts presented to the court is void as a 
       matter of public policy.  In addition[,] there was no consideration, 
       which is necessary to create an enforceable release.  Accordingly, 
       plaintiff's motion for partial summary judgment on this affirmative 
       defense is hereby GRANTED.  Defendants' affirmative defense of 
       waiver is hereby dismissed with prejudice.

       The parties tried the case to a jury.  The jury received instructions on 

actual damages and emotional distress damages.  The jury found that (1) Grace 

was not negligent in dealing with Alia, (2) Grace was negligent in the Grimes 

transaction, (3) Grace's negligence in the Grimes transaction proximately 

caused Hanks's damages, and (4) Grace did not breach his contract with Hanks

to purchase her house.  The jury awarded Hanks $195,000 in past economic 

damages and $170,000 in noneconomic damages.  

       After the verdict, Grace moved under CR 50 for judgment as a matter of 

       4 Here, the trial court ruled, "[T]here are genuine issues of material fact 
presented by this matter.  Accordingly, defendants'              motion for summary 
judgment is hereby DENIED."  
                                           -5- 

NO. 66071-3-I / 6

law, arguing that insufficient evidence supported the jury's finding that Grace's 

negligence proximately caused Hanks's damages and that                    noneconomic 

damages are not recoverable in a negligence action.  The trial court denied 

Grace's motion and entered final judgment on the jury's verdict.

       Grace appeals.

                                      ANALYSIS

Did Hanks waive her claims against Grace?

       Grace claims the trial court erred by granting Hanks's motion for partial

summary judgment.  The trial court granted Hanks's motion after concluding that 

the  rescission contract's exculpatory clause          was invalid due to lack of 

consideration and that the release provision was void as a matter of public 

policy.  Whether consideration supports a contract and whether a contractual 

provision contravenes public policy are questions of law, which we review de 

novo.  

       First, we consider whether a  lack of consideration made  the release 

provision   unenforceable.     Generally, a contract must be supported by 

consideration.5   In Washington, however, a contractual waiver can be unilateral 

and without consideration.6   Therefore, the rescission contract's exculpatory 

       5 Keystone Land & Dev. Co. v. Xerox Corp., 152 Wn.2d 171, 178, 94 P.3d 
945 (2004).
       6 Panorama Residential Protective Ass'n v. Panorama Corp. of Wash., 97 
Wn.2d 23, 28, 640 P.2d 1057 (1982) (citing Gorge Lumber Co. v. Brazier 
                                           -6- 

NO. 66071-3-I / 7

clause does not fail due to lack of consideration.  

       Next, we address whether the exculpatory clause violated public policy.  

Washington courts generally accept, "subject to certain exceptions, [that] parties 

may contract that one shall not be liable for his or her own negligence to 

another."7   However,  "[t]here are instances where public policy reasons for 

preserving an obligation of care owed by one person to another outweigh our 

traditional regard for freedom of contract."8       As our Supreme Court recently 

acknowledged, "This court has analyzed express releases seeking to immunize 

a defendant for negligent breach of a duty imposed by law and found that these 

violate public policy."9  We find such an instance here.

       An agreement contravenes public policy if "'the contract as made has a 

tendency to evil, to be against the public good, or to be injurious to the public.'"10  

In  Wagenblast v. Odessa School District No. 105-107-166J,11 our Supreme 

Lumber Co., 6 Wn. App. 327, 335, 493 P.2d 782 (1972)).  
       7 Wagenblast v. Odessa Sch. Dist. No. 105-107-166J, 110 Wn.2d 845, 
848, 758 P.2d 968 (1988).
       8 Scott v. Pac. W. Coast Mountain Resort, 119 Wn.2d 484, 493, 834 P.2d 
6 (1992).
       9 Gregoire v. City of Oak Harbor, 170 Wn.2d 628, 637-38, 244 P.3d 924 
(2010) (citing Wagenblast, 110 Wn.2d 845; Vodopest v. MacGregor, 128 Wn.2d 
840, 913 P.2d 779 (1996)).
       10 Marshall v. Higginson, 62 Wn. App. 212, 216, 813 P.2d 1275 (1991)
(internal quotation marks omitted) (quoting Golberg v. Sanglier, 27 Wn. App. 
179, 191, 616 P.2d 1239 (1980), rev'd on other grounds, 96 Wn.2d 874, 639 
P.2d 1347, 647 P.2d 489 (1982)).
       11 110 Wn.2d 845, 852-56, 758 P.2d 968 (1988).          Neither party cites this 
case.
                                           -7- 

NO. 66071-3-I / 8

Court  held that requiring students and their parents to sign an agreement 

releasing  the school district from all potential future negligence claims as a 

condition of participating in interscholastic athletics violates public policy.  The 

court identified and examined six characteristics common to invalid releases.12  

              Under Wagenblast, the enforceability of a release depends on 
       whether:  (1) the agreement concerns an endeavor of a type thought 
       suitable for public regulation; (2) the party seeking to enforce the release 
       is engaged in performing  an important public service, often one of 
       practical necessity; (3) the party provides the service to any member of 
       the public, or to any member falling within established standards; (4) the 
       party seeking to invoke the release has control over the person or 
       property of the party seeking the service; (5) there is a decisive inequality 
       of bargaining power      between the parties; and (6) the release is a 
       standardized adhesion contract.[13]

The more of these characteristics present in a case, the more likely we are to 

declare the agreement invalid on public policy grounds.14

       An examination of the  Wagenblast characteristics present in this case 

demonstrates that the exculpatory clause under review violates Washington 

public policy.  Chapter 18.85 RCW  and chapter 18.86 RCW  regulate the 

activities of real estate agents and brokers.  These statutes govern licensing and 

define  the duties and responsibilities of those who sell real estate.  In addition, 

the Uniform Regulation of Business and Professions Act, chapter 18.235 RCW,

       12 Wagenblast, 110 Wn.2d at 852-56.
       13 Chauvlier v. Booth Creek Ski Holdings, Inc., 109 Wn. App. 334, 343, 35 
P.3d 383 (2001).
       14 Wagenblast, 110 Wn.2d at 852.
                                           -8- 

NO. 66071-3-I / 9

prohibits real estate agents from engaging in unprofessional conduct, including 

"[i]ncompetence, negligence, or malpractice that results in harm or damage to 

another or that creates an unreasonable risk of harm or damage to another."15  

       Real estate agents and brokers provide an important service to the public.  

While an agent does not perform an essential service because a person can 

market his or her house without one, enlisting the help of an agent is often a 

matter of practical necessity.       Real estate agents possess expertise that 

members of the general public generally do not.  In recognition of this expertise, 

RE/MAX and its agents hold their services out to members of the public.  After 

an agent and seller establish a relationship, the agent largely has control over 

the sale.  While the seller controls the terms of the sale, the agent usually 

controls how the seller's goals are realized.  In light of the foregoing 

considerations, characteristics one, two, three, and four are present. 

       Turning to the final characteristics -- whether           there was a decisive 

inequality in bargaining power between the parties and whether the terms were 

contained in a standardized adhesion contract -- we also find these present in 

this case.  A real estate agent, who regularly deals with and is familiar with the 

standardized forms used in residential real estate transactions, clearly has a 

superior bargaining power over a typical seller, who lacks sophistication and 

       15 RCW 18.235.130(4).
                                           -9- 

NO. 66071-3-I / 10

much experience in the business of buying and selling houses.  Additionally, 

Grace supplied the release as part of a standard form contract published by the 

Northwest Multiple Listing Service.  The parties did not discuss the clause, and 

Grace did not present Hanks with the opportunity to change the document.  

Hanks testified to her belief that she had no alternative but to sign.  According to 

Hanks, Grace presented the rescission contract to her as the only option if she 

wanted to sell her house to another buyer, namely, him.  

       All of the six Wagenblast characteristics of an unenforceable exculpatory 

agreement are present in this case.  Under these circumstances, the exculpatory 

clause violates public policy.  The trial court did not err by  dismissing Grace's 

waiver defense.16

Did the trial court err by denying Grace's summary judgment motion?

       Grace challenges the trial court's denial of his summary judgment motion.  

We, however, will not review an order denying summary judgment when raised 

after a trial on the merits, where, as here, the denial is based on the presence of 

material, disputed facts.17      "The primary purpose of a  summary judgment 

procedure is to avoid a useless trial."18   Once a court holds a trial on the merits, 

       16 We note the parties analyze this issue in the context of Marshall and do 
not address Wagenblast.       Because Wagenblast controls, we need not discuss 
their analysis.
       17 Johnson v. Rothstein, 52 Wn. App. 303, 304, 759 P.2d 471 (1988); see 
also Adcox v. Children's Orthopedic Hosp. & Med. Ctr., 123 Wn.2d 15, 35 n.9, 
864 P.2d 921 (1993).  
                                          -10- 

NO. 66071-3-I / 11

reviewing the decision to deny a party's motion for summary judgment would do 

nothing to further this purpose.19    Because this challenge is not properly before 

us, we do not consider the merits of Grace's substantive claims.  

Did the trial court err by denying Grace's motion for judgment as a matter of law?

       Grace claims that the trial court improperly denied his CR 50 motion for 

judgment as a matter of law.  Again, a procedural bar precludes Grace from 

raising this issue on appeal.  CR 50 permits a court to enter judgment as a 

matter of law if "during a trial by jury, a party has been fully heard with respect to 

an issue and there is no legally sufficient evidentiary basis for a reasonable jury 

to find or have found for that party with respect to that issue."20   Regarding

timing, CR 50 provides that "[a] motion for judgment as a matter of law may be 

made at any time before submission of the case to the jury."21         If the trial court

does "not grant a motion for judgment as a matter of law made at the close of all 

the evidence, . . . [t]he movant may renew its request for judgment as a matter of 

law by filing a motion no later than 10 days after entry of judgment."22       The rule 

makes clear that a party must move for judgment as a matter of law before the 

trial court submits the case to the jury to preserve any opportunity to renew its 

       18 Johnson, 52 Wn. App. at 307.
       19 Johnson, 52 Wn. App. at 307.
       20 CR 50(a)(1).
       21 CR 50(a)(2) (emphasis added).
       22 CR 50(b) (emphasis added).
                                          -11- 

NO. 66071-3-I / 12

motion after the case is submitted.23  Because Grace first moved for judgment as 

a matter of law after the jury's verdict, the trial court did not err by denying his 

untimely motion.  

       Grace argues that CR 50 is ambiguous because the rule states a party

"may,"  rather than "must,"     move for judgment as a matter of law before 

submission of the case to the jury. This argument is not well taken.  A rule is not 

ambiguous simply because it employs optional, rather than mandatory, 

language.  Alternatively, Grace asks this court to excuse his noncompliance with 

CR 50 because it would "serve the ends of justice," citing Scannell v. State.24  

That case, however, involved a motion to extend time to file under RAP 18.8.25  

       23 Amendments in 2005 to CR 50 changed the rule, which before allowed 
a party to move for judgment as a matter of law after the case had been 
submitted to the jury     "'whether or not the party has moved previously for 
judgment as a matter of law.'"    Mega v. Whitworth Coll., 138 Wn. App. 661, 668-
69, 158 P.3d 1211 (2007) (quoting former CR 50(b)).  The drafters explained the
2005 amendments to CR 50 as follows,  
       This suggested amendment changes Washington practice and 
       requires that a motion for judgment as a matter of law be made 
       before submission of the case to the jury as a condition to 
       renewing the motion post-verdict.  The Committee concluded that 
       requiring a motion for judgment as a matter of law before the case 
       is submitted to the jury enhances the administration of justice 
       because the parties and/or the court can correct possible errors 
       before verdict.  Absent such a motion before submission of the 
       case to the jury, a party may not bring a motion for judgment as a 
       matter of law thereafter.
4 Karl B. Tegland, Washington Practice: Rules Practice CR 50 drafters' cmt. at 
211 (5th ed. 2006).
       24 128 Wn.2d 829, 912 P.2d 489 (1996).
       25 Scannell, 128 Wn.2d at 833-34.
                                          -12- 

NO. 66071-3-I / 13

And there, unlike here, the appellant's tardiness was excusable based on his 

well-grounded confusion over a change in the appellate rules.26          Grace has not 

demonstrated that he was unaware of the 2005 amendment to CR 50 or that a

lack of this knowledge would be excusable.   Because Grace failed to timely 

move for judgment as a matter of law, we do not review his claims' merits.

                                    CONCLUSION

       Two procedural bars prevent Grace from challenging the trial court orders 

denying his motion for summary judgment and his CR 50 motion.  And because 

Hanks did not waive her claim through the invalid release clause, we affirm.

WE CONCUR:

       26 Scannell, 128 Wn.2d at 833-34.
                                          -13-