Water Works Properties, LLC v. William Dan Cox, et ux
33332-9
| Wash. Ct. App. | Oct 25, 2016Background
- Dispute between orchardist William Cox (and related entities) and lender/operator John McQuaig/Water Works Properties arising from loans, asset transfers, and operation of orchard property.
- McQuaig lent money, purchased some Cox assets, and operated part of the orchard; Cox later defaulted and filed bankruptcy; cross-suits followed.
- Bench trial produced extensive factual findings: court found McQuaig lacked credibility on key points, no fiduciary duty, Cox defaulted on a $150,000 note, and adjusted orchard boundaries in favor of Cox (following irrigation lines).
- Trial ordered return/value of equipment to Cox (conversion damages) and found McQuaig improperly intercepted crop sale proceeds and retained certain checks after earlier transactions extinguished his prior security interest.
- After a supplemental hearing to fix legal descriptions and valuations, the court entered mutual judgments (Cox judgment net ~$14,296) denied trial attorney fees to both sides but awarded Cox fees for the supplemental hearing; Cox awarded appellate fees for defense of McQuaig’s appeal.
Issues
| Issue | Plaintiff's Argument (McQuaig) | Defendant's Argument (Cox) | Held |
|---|---|---|---|
| Boundary line adjustment (BLA) | BLA cannot be reformed to follow irrigation lines due to unilateral mistake and statute of frauds | Parties intended boundaries to follow irrigation lines; survey was mistaken and should be reformed to reflect intent | Court reformed boundary to follow irrigation lines; survey error, not party mistake, statute of frauds not a bar |
| Lien on crop proceeds / lease violation | McQuaig claimed right to intercept proceeds to secure alleged claims | Cox argued interception violated lease provision entitling him to net proceeds and prevented normal crop financing | Court found McQuaig wrongfully impounded proceeds, causing Cox financing costs and lost packing bonuses; awarded damages to Cox |
| Retainage checks / security interest | McQuaig asserted a continuing security interest (2007) in proceeds | Cox showed 2009 deeds-in-lieu and agreements extinguished that security interest | Court held the 2007 security interest was extinguished in 2009; McQuaig improperly retained checks |
| Conversion / valuation of equipment | McQuaig claimed ownership or security interest in equipment used on orchard | Cox demonstrated equipment not sold with land (only items in Exhibit B conveyed); other equipment belonged to Cox | Court found conversion by McQuaig; awarded damages based on Cox’s proofs |
| Attorney fees (trial, supplemental, appeal) | McQuaig sought fees as substantially prevailing party; challenged Cox’s supplemental and appellate fees | Cox sought fees for supplemental hearing and appellate defense | Trial court did not abuse discretion: denied fees for trial (neither side substantially prevailed), awarded Cox fees for supplemental hearing and appellate defense; affirmed |
Key Cases Cited
- In re Estate of Jones, 152 Wn.2d 1 (discusses unchallenged findings as verities on appeal)
- Smith v. Emp't Sec. Dep't, 155 Wn. App. 24 (substantial-evidence standard for findings)
- Dorsey v. King County, 51 Wn. App. 664 (definition of substantial evidence)
- Gammel v. Diethelm, 59 Wn.2d 504 (unilateral mistake and unconscionability doctrine)
- Powers v. Hastings, 20 Wn. App. 837 (statute of frauds prevents fraud, not correctable mistakes)
- Tenco v. Manning, 59 Wn.2d 479 (statute of frauds and reformation when instrument fails to reflect parties' intent)
- Mahler v. Szucs, 135 Wn.2d 398 (standard of review for attorney fee awards)
- State ex rel. Carroll v. Junker, 79 Wn.2d 12 (abuse of discretion standard)