Wa Federal Savings, Res/cross-app. v. Algo, Inc. And Allen R. Grant, Apps/cross-res.
72114-3
| Wash. Ct. App. | Feb 21, 2017Background
- Grant defaulted on his Washington Federal loan in 2011 and the bank foreclosed the collateral securing the loan.
- The parties mediated and signed a Settlement Agreement on August 1, 2012, promising Grant $1 million via a promissory note secured by real property, with potential discounts for early payment and 0% interest for 60 months (12% on default).
- Grant never signed a promissory note or secured collateral; he repudiated the Settlement Agreement on February 11, 2013.
- Washington Federal sought summary judgment on breach; the trial court granted it in part, awarding $1 million, later reduced to $850,000, plus prejudgment interest and attorney fees; costs were awarded as requested.
- Grant bankruptcy proceedings treated Washington Federal as an unsecured creditor; the trial court’s order and the post-judgment posture are on appeal.
- The court ultimately held that the $1 million principal sum was due immediately upon Grant’s material breach, reversed the discount-based reduction to $850,000, affirmed prejudgment interest, and reversed the attorney-fees award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Damages for breach amount | Washington Federal: full $1M due immediately due to material breach | Grant: only $850K (discounts apply; note not executed) | $1,000,000 principal due immediately |
| Prejudgment interest | Interest should accrue on liquidated sum from breach date | No interest until payment due date | Affirmed prejudgment interest |
| Attorney fees | Contract allows fees to enforce the note; fees should follow | Settlement Agreement does not authorize fees for enforcement; not applicable | Reversed; no attorney fees awarded to Washington Federal |
| Discounts and present value | Discounts should reduce the amount due if applicable | Discounts should apply only if note executed and payment timely | Discounts not applicable; present value reduction rejected |
| Acceleration clause/foreseeable breach | Draft note implied acceleration upon breach | No general acceleration clause; note not executed; cannot accelerate | No general acceleration; damages awarded on $1M unaffected by acceleration |
Key Cases Cited
- Rathke v. Roberts, 33 Wn.2d 858 (1949) (liquidated damages and full performance concepts under contract law)
- Colorado Structures, Inc. v. Ins. Co. of the West, 161 Wn.2d 577 (2007) (breach; liquidated damages; remedies for total breach)
- Prier v. Refrigeration Enq'a Co., 74 Wn.2d 25 (1968) (prejudgment interest on liquidated sums; computation as of breach date)
- Bulman v. Safeway, Inc., 144 Wn.2d 335 (2001) (contract elements; consideration; acceleration concepts)
- CPK, Inc. v. GRS Const. Co., 63 Wn. App. 601 (1991) (breach and continuing performance; damages patterns)
- Berg v. Hudesman, 115 Wn.2d 657 (1990) (interpretation of integrated writings; admissibility of negotiations to interpret contract)