CRJ Kim, Inc. v. JKI Investments, Inc.
48566-4
| Wash. Ct. App. | Mar 14, 2017Background
- CRJ Kim, Inc. (buyer) and JKI Investments, Inc. (seller) executed a PSA on Dec. 31, 2014 for sale of a Super 8 motel for $3.5M; the PSA incorporated an Amendment and a standardized Financing Addendum.
- The PSA did not allocate the $3.5M among real property, personal property, goodwill, or the covenant not to compete; parties never discussed allocation during drafting.
- The Financing Addendum (new financing option) required buyer to obtain financing for 80% and to give written notice that financing was satisfied or waived within 60 days of mutual acceptance (deadline March 2, 2015); the box for new financing was not checked but the PSA expressly referenced the Financing Addendum.
- CRJ removed the feasibility contingency in mid-February, applied for a loan Feb. 13, and obtained final financing approval March 19, but did not give the written 60-day notice by March 2; seller communicated with buyer’s lender before and shortly after March 2.
- On March 19 seller’s counsel declared the PSA terminated for failure to provide the 60-day notice; CRJ sued for specific performance and damages and sued seller’s president, David Kim, for tortious interference; trial court granted CRJ summary judgment and denied David Kim summary judgment.
- Court of Appeals reversed: held PSA enforceable despite lack of allocation; Financing Addendum’s 60-day notice applied; seller did not waive or is not estopped from enforcing deadline; David Kim entitled to summary judgment on tortious interference; remanded for judgment for JKI and for fees to JKI on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PSA is unenforceable because purchase price not allocated among assets | Allocation is material to form a contract; absence makes PSA incomplete | Allocation is not an essential term; consideration and subject matter are specified | PSA enforceable; allocation not a required material term |
| Whether the Financing Addendum’s 60‑day notice applied when its new‑financing box was not checked | Addendum inapplicable because box unchecked; Amendment’s financing clause controls | Paragraph 1 of PSA expressly incorporated Financing Addendum; parties filled the 80% blank | Financing Addendum (including 60‑day notice) applied to the transaction |
| Whether JKI waived or is estopped from enforcing the 60‑day deadline by continuing lender communications after the deadline | Seller’s post‑deadline communications and cooperation waived/enforced estoppel | Deadline terminated the PSA automatically; only pre‑deadline conduct can waive; post‑deadline conduct ambiguous | No waiver; estoppel not established (CRJ failed to prove reasonable reliance and injury) |
| Whether David Kim can be liable for tortious interference personally | Kim’s animus and statements show improper motive/means causing termination | As corporate officer, Kim acted for JKI’s benefit, within authority, in good faith; officers not liable personally | David Kim entitled to summary judgment; no prima facie tortious interference established |
Key Cases Cited
- Keck v. Collins, 184 Wn.2d 358 (Wash. 2015) (standard of review and summary judgment principles)
- P.E. Sys., LLC v. CPI Corp., 176 Wn.2d 198 (Wash. 2013) (mutual assent and material terms requirement for contract formation)
- Setterlund v. Firestone, 104 Wn.2d 24 (Wash. 1985) (court cannot order specific performance when material terms are missing)
- Kruse v. Hemp, 121 Wn.2d 715 (Wash. 1993) (list of essential contract terms in real estate transactions)
- 16th St. Investors, LLC v. Morrison, 153 Wn. App. 44 (Wash. Ct. App. 2009) (specific performance requires material terms)
- Mid‑Town Ltd. P’ship v. Preston, 69 Wn. App. 227 (Wash. Ct. App. 1993) (post‑deadline conduct cannot revive an agreement that terminated by its time provision)
- Nadeau v. Beers, 73 Wn.2d 608 (Wash. 1968) (contract terminates by operation of time provision absent prior waiver/estoppel)
- Elcon Constr., Inc. v. E. Wash. Univ., 174 Wn.2d 157 (Wash. 2012) (elements of tortious interference and improper means/motive)
- Olympic Fish Prods., Inc. v. Lloyd, 93 Wn.2d 596 (Wash. 1980) (corporate officer liability for interference limited where acts are for corporation’s benefit and in good faith)