Soundbuilt Northwest Llc. v. Commonwealth Title Insurance, 74128-4

Background

In 2004 Soundbuilt contracted to buy a 22‑lot plat; DALD/Newhall sold it to another buyer and Soundbuilt sued, recording a lis pendens.
Chelan Homes purchasers had title insurance from Commonwealth; Commonwealth required an indemnity agreement from DALD/Newhall to issue the policy.
After litigation, Soundbuilt obtained specific performance; Commonwealth agreed to a settlement: $5 million paid immediately to Soundbuilt and up to $3 million contingent on Commonwealth obtaining a final judicial determination that DALD/Newhall must indemnify Commonwealth (Commonwealth to pursue that determination “as soon as reasonably possible”).
Commonwealth obtained an $8 million indemnity judgment at trial, but DALD/Newhall appealed and later filed bankruptcy; the appeal was stayed, then controlled by the bankruptcy trustee.
In Sept. 2010 Soundbuilt made a side deal with the trustee to dismiss the indemnity appeal (promising $225,000 to the estate out of the hoped-for $3M); Commonwealth had delayed several months before moving for relief from the bankruptcy stay. The jury found Soundbuilt materially breached on Sept. 9, 2010 and Commonwealth breached non‑materially on July 13, 2010.
Trial court entered judgment for Commonwealth (excusing the contingent payment due to Soundbuilt’s material breach), denied Soundbuilt damages, and awarded Commonwealth attorney fees and costs; Soundbuilt appealed.

Issues

Issue	Soundbuilt's Argument	Commonwealth's Argument	Held
Was Commonwealth's delay in seeking relief from the bankruptcy stay a material breach?	Delay was untimely and, with a “time is of the essence” clause, material as a matter of law.	Delay (~3 months) was not material; Soundbuilt's later conduct, not the delay, caused the loss of the contingency.	Jury verdict affirmed: Commonwealth's breach was non‑material; sufficient evidence supported that result.
Was Soundbuilt's agreement with the trustee (to dismiss the appeal) a material breach that prevented Commonwealth's performance?	The trustee deal was a reasonable tactic to accelerate resolution; not a material breach.	Soundbuilt unilaterally interfered with Commonwealth's control of the indemnity litigation, materially depriving Commonwealth of its bargained‑for process.	Jury verdict affirmed: Soundbuilt’s dismissal agreement was a material breach that excused Commonwealth from paying the contingent $3M.
Is Soundbuilt entitled to expectation damages for Commonwealth’s breach?	Yes; the jury found Commonwealth breached (albeit non‑materially) so Soundbuilt should recover damages.	Soundbuilt failed to prove causation and damages from Commonwealth’s brief delay; its own breach caused the ultimate loss.	Affirmed: Soundbuilt bore the burden of proof and failed to show damages caused by Commonwealth’s delay.
Is Commonwealth the prevailing party entitled to contractual attorney fees and costs?	Soundbuilt argued both breached and thus no prevailing party.	Commonwealth argued judgment entered for it and no affirmative judgment against it—so it prevailed.	Affirmed: Commonwealth was prevailing party; trial court’s fee and cost award to Commonwealth stands (and it may recover appellate fees).

Key Cases Cited

Millies v. LandAmerica Transnation, 185 Wn.2d 302 (2016) (standards for reviewing sufficiency of evidence and motions for new trial)
Cartozian & Sons, Inc. v. Ostruske‑Murphy, Inc., 64 Wn.2d 1 (1964) (materiality of delay depends on surrounding circumstances)
224 Westlake, LLC v. Engstrom Props., LLC, 169 Wn. App. 700 (2012) (plaintiff bears burden to prove damages for breach)
Teter v. Deck, 174 Wn.2d 207 (2012) (standard for new trial based on alleged counsel misconduct)
Seashore Villa Ass'n v. Hugglund Family Ltd. P'ship, 163 Wn. App. 531 (2011) (definition of prevailing party obtaining judgment in its favor)
Eagle Point Condominium Owners' Ass'n v. Coy, 102 Wn. App. 697 (2000) (prevailing‑party analysis where no affirmative judgment entered)