Charles Woods, Resp/cross V Tom And Karen Hall, Apps/cross-respondents
48507-9
| Wash. Ct. App. | Jun 20, 2017Background
- Woods sold his restaurant business (Harwoods, LLC) to Tom and Karen Hall under a Purchase and Sale Agreement (PSA) that gave Woods a security interest in Harwoods’s "inventory, equipment, accounts, and supplies" and the right to repossess on default.
- The Halls defaulted; Woods elected not to reinstate the lease and sought to repossess business assets. A dispute arose over whether the custom bar and commercial stove hood were repossessable or leasehold improvements owned by Hallmark (the landlord, owned by the Halls).
- The Halls refused Woods’s demand to have the assets assembled and placed curbside; they threatened police involvement and later sold the assets to a new tenant for $10,000.
- Woods sued for conversion (among other claims) and obtained a bench judgment finding conversion and awarding $40,123.04 (fair market value) for converted assets, but denied prejudgment interest and attorney fees; the trial court nevertheless found the bar and stove hood belonged to Woods.
- On appeal the Court of Appeals affirmed conversion liability and damages for the undisputed personal property, reversed conversion liability as to the bar and stove hood (finding they were leasehold improvements owned by Hallmark), and remanded to deduct those two items from the damage award; it also affirmed denial of prejudgment interest and attorney fees.
Issues
| Issue | Plaintiff's Argument (Woods) | Defendant's Argument (Halls) | Held |
|---|---|---|---|
| Ownership of bar and stove hood | Bar and hood were business "equipment" covered by Woods’s security interest and subject to repossession. | Bar and hood were leasehold improvements (installed with tenant-improvement allowance) that remained with premises under lease. | Reversed trial court: hood and bar are leasehold improvements owned by Hallmark, not subject to Woods’s security interest. |
| Conversion of remaining assets | Halls unlawfully withheld/failed to make collateral available, interfering with Woods’s possessory rights. | Halls complied with lease/municipal rules and did not convert; repossession request improper. | Affirmed: substantial evidence supports conversion for undisputed personal property; Halls’ refusal and threats supported interference. |
| Measure of damages for conversion | Damages should be based on fair market value at time of conversion or purchase price. | If not fair market value, trial court misapplied valuation. | Affirmed valuation method: damages based on fair market value at conversion; remanded to deduct value of bar and hood. |
| Prejudgment interest and attorney fees | Damages were liquidated/readily determinable → prejudgment interest and contract or UCC provisions entitle Woods to fees. | Damages were unliquidated; Woods not a party to lease; statutory UCC provision doesn’t authorize trial attorney-fee awards here. | Affirmed denial of prejudgment interest (damages unliquidated) and attorney fees (no contractual or statutory basis for award). |
Key Cases Cited
- Hegwine v. Longview Fibre Co., 132 Wn. App. 546 (review of bench trial findings and conclusions of law)
- Burnside v. Simpson Paper Co., 123 Wn.2d 93 (deference to factfinder credibility)
- Potter v. Washington State Patrol, 165 Wn.2d 67 (measure of damages for conversion = fair market value)
- In re Marriage of Langham & Kolde, 153 Wn.2d 553 (elements of conversion and possessory interest)
- Alhadeff v. Meridian on Bainbridge Island, LLC, 167 Wn.2d 601 (conversion includes unlawful retention)
- Merchant v. Peterson, 38 Wn. App. 855 (definition of fair market value for conversion damages)
- Prier v. Refrigeration Eng’g Co., 74 Wn.2d 25 (liquidated vs. unliquidated damages for prejudgment interest)
- Brown v. Brown, 157 Wn. App. 803 (conversion intent and good/bad faith not dispositive)