Betty Frye And Todd Duty, Apps. v. Jdh Investment Group Llc, Res.
79318-7
Wash. Ct. App.
Apr 6, 2020

Background

  • In 2013 Frye sold undeveloped Auburn real property to JDH for $3,000,000, receiving $2,000,000 cash and two $500,000 promissory notes secured by the Auburn property; each note recited 5% interest “until paid” and a 6% late‑charge clause.
  • On the same day Frye took a $1.55 million promissory note from Northshore Montessori (the Daycare note) drafted by Randall Jackson; a printed personal‑guarantee clause later was crossed out before delivery.
  • By 2017 JDH (then owned by Downie) sought refinancing and escrow required a payoff and reconveyance from Frye; JDH tendered $1.2 million (the two $500k principal amounts plus 5% interest), which Frye refused and instead demanded increasing sums up to $1.7 million and then filed a complaint and recorded a lis pendens.
  • The trial court found Frye’s claims (fraud, elder abuse, consumer protection, etc.) unsupported, held: the Auburn notes bore 5% interest after maturity, the 6% late charge was an unenforceable penalty, JDH’s $1.2M tender stopped interest, Downie did not personally guarantee the Daycare note (scrivener’s error), and Frye’s complaint/lis pendens constituted slander of title and tortious interference.
  • The court awarded JDH and Downie damages and attorney fees; after offsets the court found JDH owed Frye $646,908 and Downie owed Frye $12,801. The Court of Appeals affirmed.

Issues

Issue Frye's Argument JDH/Downie Argument Held
Post‑maturity interest rate on Auburn notes The notes’ 5% rate applied only until maturity; RCW 19.52.010 12% statutory rate applies after default The phrase “until paid” shows parties intended 5% to continue after maturity Court: 5% continued after maturity; “until paid” controls (instrumental precedent supports it)
Enforceability of 6% late charge Late charge is a reasonable liquidated‑damages/collection estimate Late charge is not a reasonable pre‑estimate of loss and functions as a penalty Court: 6% late charge is an unenforceable penalty
Effect of JDH’s $1.2M tender Tender was insufficient/conditional so interest continued Tender equaled amount actually due (5% after maturity, no late charge), so was unconditional and stopped interest Court: Tender was unconditional and discharged interest accrual on the amount tendered
Whether Downie personally guaranteed Daycare note Downie argues he did not guarantee; Frye says guarantee exists in signed exhibit Respondents: personal‑guarantee language was a scrivener’s error and was crossed out before delivery Court: Scrivener’s error established by credible testimony; Downie did not personally guarantee
Whether Frye’s complaint + lis pendens constituted slander of title / tortious interference Frye contends filings were privileged and made in good faith JDH/Downie: filings were false, malicious, clouded title, and intentionally interfered with refinancing/sale Court: Findings support slander of title and tortious interference; Frye acted maliciously and for improper purpose
Attorney fees award Frye: fees improper, not authorized by contract or unreasonable Respondents: contractual fee clauses (PSA, notes, Daycare note) and RCW 4.84.330 allow fees; fee calculation reasonable Court: Fee awards upheld as authorized and not an abuse of discretion; appellate fees awarded to respondents

Key Cases Cited

  • Bank v. Doherty, 42 Wn. 317 (Wash. 1906) (interpreting "until paid" language and post‑maturity interest)
  • TJ Landco, LLC v. Harley C. Douglass, Inc., 186 Wn. App. 249 (Wash. Ct. App. 2015) (distinguishing agreements that specify interest "until paid")
  • Wallace Real Estate Inv., Inc. v. Groves, 124 Wn.2d 881 (Wash. 1994) (liquidated damages v. penalty test)
  • Walter Implement, Inc. v. Focht, 107 Wn.2d 553 (Wash. 1986) (liquidated‑damages reasonableness standard)
  • Jones v. Best, 134 Wn.2d 232 (Wash. 1998) (tender must be unconditional to stop interest)
  • Centurion Prop. III, LLC v. Chicago Title Ins. Co., 186 Wn.2d 58 (Wash. 2016) (elements of slander of title and requirement of malice)
  • Rorvig v. Douglas, 123 Wn.2d 854 (Wash. 1994) (malice defined for slander of title)
  • Badgett v. Security State Bank, 116 Wn.2d 563 (Wash. 1991) (implied duty of good faith and fair dealing)
  • Mueller v. Wells, 185 Wn.2d 1 (Wash. 2016) (deference to trial court credibility findings)
  • Douglas v. Visser, 173 Wn. App. 823 (Wash. Ct. App. 2013) (substantial‑evidence standard on bench trial findings)
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