Cooke v. Goethals, 157 Wash. App. 1067 (2010)

Facts

  • Steve and Dana Cooke and Gilbert and Leta Ray (also spelled “Lena”) Goethals were longtime friends; Gilbert and Leta’s son, Don Goethals, was a real estate agent.
  • In May 2001, the Cookes discussed buying a Lake Tapps-area parcel owned by Gilbert and Leta. The property was vacant except for a free-standing garage the Cookes wanted to use for building and storing a helicopter and for future residential plans.
  • The Cookes and the Goethalses orally agreed on a purchase price of $60,000.
  • The Cookes could not obtain conventional financing until a lot-line adjustment was completed. The Goethalses represented that the lot-line adjustment would be handled and would not be a problem.
  • While waiting for the lot-line adjustment, the parties orally agreed the Cookes would make monthly payments of about $350, based on a 30-year amortization with interest around 6–7% (including taxes), and that the transaction would be treated like a real estate contract with a balloon payment due in five years when the Cookes refinanced.
  • No written purchase-and-sale agreement or real estate contract was signed.
  • A third-party witness overheard the discussions and later confirmed that both sides agreed to the sale.
  • The Cookes took possession of the property, cleaned up garbage and debris, and used the site consistent with ownership.
  • The Cookes made the monthly payments to the Goethalses and spent approximately 6,000–6,000–7,000 improving the property, including rebuilding the front of the garage.
  • In December 2007, a Federal Express truck struck the garage and knocked out power. The Goethalses did not undertake repairs but suggested ways the Cookes could pursue recovery for the damage.
  • In 2008, after the lot-line adjustment was obtained, the Goethalses refused to complete the sale on the prior terms. The Cookes learned loggers were on the property; Don told them the property would now be sold for $100,000 rather than $60,000.
  • The Cookes refused the increased price and asserted the original agreement. The Goethalses served notice directing the Cookes to remove their personal property.
  • The Cookes sued for specific performance of the oral agreement and, alternatively, damages for breach of contract and fraud. The trial court granted the Goethalses’ summary-judgment motion based on the statute of frauds, and the Cookes appealed.

Issues

  1. Does the statute of frauds bar enforcement of the alleged oral agreement to sell real property, or did the Cookes present enough evidence of part performance to create a triable issue that removes the agreement from the statute of frauds?
  2. On summary judgment, did the Cookes’ evidence of possession, payment, and improvements raise genuine issues of material fact as to whether their acts were unequivocally referable to a purchase agreement rather than some other arrangement?

Decision

  • The Washington Court of Appeals, Division II, reversed the trial court’s summary judgment for the Goethalses.
  • The court held that the Cookes presented evidence from which a factfinder could determine that the Cookes partially performed the alleged oral land-sale agreement through possession, payments, and improvements.
  • Because material fact disputes remained about whether the part-performance exception applied, the statute-of-frauds defense could not be resolved as a matter of law on summary judgment.
  • The case was remanded for further proceedings.

Legal Principles

  • Washington’s statute of frauds generally requires contracts for the sale or conveyance of real property to be in writing to be enforceable.

  • Equity may allow enforcement of an oral land-sale agreement under the part-performance doctrine when the claimant proves acts that are consistent with the alleged contract and not reasonably explained by another relationship.

  • Common indicators of part performance include:

    • actual and exclusive possession of the property,
    • payment of consideration, and
    • substantial improvements to the property.

  • The acts must be “unequivocally referable” to the claimed purchase agreement, meaning they make sense as conduct of a buyer and are not equally consistent with, for example, a tenancy or license.

  • On summary judgment, courts view evidence and reasonable inferences in the nonmoving party’s favor; if reasonable factfinders could differ on whether the part-performance elements are met, summary judgment is improper.

Conclusion

The Court of Appeals held that the Cookes’ evidence of taking possession, making monthly payments structured like purchase financing, and investing thousands of dollars in improvements could support a finding of part performance that takes an oral land-sale agreement outside the statute of frauds, so dismissing the case on summary judgment was error and the matter had to be tried.