Eastwood v. Horse Harbor Foundation, Inc.
241 P.3d 1256
Wash.2010Background
- Eastwood owns Double KK Farm and leases part of it to Horse Harbor Foundation with covenants to maintain the leasehold and return it in good condition.
- Horse Harbor allegedly failed to maintain the premises, allowing manure buildup, improper waste management, standing water, and damaged facilities.
- Warren, Horse Harbor's paid manager, and Katherine and Michael Daling (board directors) observed the farm's deteriorating condition but took no effective action.
- Eastwood sued for breach of lease, waste, and negligent breach of a duty not to cause damage; the trial court found waste and lease breach, with Warren and the Dalings deemed grossly negligent.
- Court of Appeals reversed, treating the waste claim as an economic loss barred by the economic loss rule; Eastwood sought review and the Supreme Court granted.
- The Supreme Court held that the duty not to cause waste is an independent tort duty and Eastwood may recover tort damages from Horse Harbor and individual defendants; RCW 64.12.020 provides a statutory waste remedy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether lessee waste permits tort recovery beyond contract remedies | Eastwood argues waste is a tort duty independent of lease terms. | Horse Harbor argues only contract remedies apply under economic loss rule. | Yes; independent tort duty allows tort recovery. |
| Are lessee employees liable for waste they cause | Warren may be personally liable for gross negligence causing waste. | Employer liability could shield individual liability under certain theories. | Yes; Warren may be personally liable for waste. |
| Does RCW 4.24.264 shield nonprofit directors from liability for gross-negligent waste | Dalings should be shielded from liability as directors absent gross negligence. | RCW 4.24.264 provides a limited shield; gross negligence defeats it. | Dalings are not shielded; they may be liable for gross negligence. |
| Whether Eastwood is entitled to attorney fees | Lease provision and waste statute entitle fees to Eastwood. | Defendants contest fee entitlement under contract and statute. | Yes; Eastwood awarded reasonable attorney fees. |
Key Cases Cited
- Alejandre v. Bull, 159 Wash.2d 674 (2007) (independent duty analysis in economic loss context; contractor disclosures)
- Stuart v. Coldwell Banker Commercial Group, Inc., 109 Wash.2d 406 (1987) (risk-of-harm approach to distinguish tort from contract remedies in construction)
- Atherton Condominium Apartment-Owners Ass'n Board of Directors v. Blume Development Co., 115 Wash.2d 506 (1990) (independent duty analysis; fraudulent concealment ok, negligent design not actionable)
- Fisher Props., Inc. v. Arden-Mayfair, Inc., 106 Wash.2d 826 (1986) (landlord may recover for both breach of lease and waste)
- Berschauer/Phillips Constr. Co. v. Seattle Sch. Dist. No. 1, 124 Wash.2d 816 (1994) (public policy limits design professional liability; independent duty context)
- East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (1986) (independent-duty concept; product liability vs contract damages)
- Graybar Elec. Co. v. Wash. Water Power Co., 112 Wash.2d 847 (1989) (product liability preemption and duty analysis within WPLA context)
- Touchet Valley Grain Growers, Inc. v. Opp & Seibold Gen. Constr., Inc., 119 Wash.2d 334 (1992) (risk-of-harm framework in economic loss context)
- Park Avenue Condominium Owners Ass'n v. Buchan Developments, LLC, 117 Wash.App. 369 (2003) (legislature's statutory rights when rights already created; limits of common law doctrine)