Zenith Global Solutions, Inc., Resp V. Linden Village Assisted Living Community, Llc, App
81490-7
| Wash. Ct. App. | Jul 6, 2021Background
- Tribach acquired Seattle property to develop an assisted‑living project funded in part by EB‑5 investors; Tribach principals formed Linden Village (Linden) and Zenith Global Solutions (Zenith) provided development services.
- Linden and Zenith entered a Development Services Agreement (DSA) (effective Aug 1, 2016) calling for Zenith to provide PDRs, obtain permits/entitlements, and other development services in exchange for a $500,000 development fee paid by a series of monthly and milestone payments (including $50,000 on issuance of the Master Use Permit (MUP) and final balance at certificate of occupancy).
- Zenith missed PDRs in Aug–Sep 2016, obtained contractor cost estimates (over $19M) that it did not report to Linden, and accepted a $35,000 debt‑placement payment from Linden after a disputed authorization.
- Linden withheld two $15,000 monthly payments and later the $50,000 MUP payment, removed Zenith’s manager Bovée, then terminated the DSA on Aug 10, 2017. Zenith sued for breach; Linden counterclaimed for breach.
- The bench trial court found Linden breached by withholding payments and awarded Zenith $80,000; the court also found Zenith breached (including failing to continue HUD loan placement in good faith) but concluded Linden failed to prove damages from Zenith’s breaches and dismissed Linden’s counterclaims. The court awarded fees to Zenith.
Issues
| Issue | Zenith's Argument (Plaintiff/Respondent) | Linden's Argument (Defendant/Appellant) | Held |
|---|---|---|---|
| Whether the trial court erred in awarding damages to Zenith despite Zenith’s breaches | Zenith performed sufficiently; Linden’s nonperformance was unjustified | Zenith breached first (including suspending HUD efforts), so Linden’s nonperformance was excused | Court affirmed: Linden bore burden to prove Zenith’s breaches were material; trial court found they were not shown material and awarded damages to Zenith |
| Whether Linden was entitled to a $35,000 setoff for the disputed debt‑placement payment | No setoff — trial court found Zenith’s retention was not a DSA breach and no debt owed | Setoff required because Zenith improperly collected $35,000 | Court affirmed: no trial finding that Zenith owed $35,000, so no statutory setoff required |
| Whether Linden proved damages from Zenith’s breaches (delay, partner withdrawal, fiduciary breach) | Zenith: Linden failed to prove causation or quantifiable damages from Zenith’s breaches | Linden: Zenith’s breaches caused project delay and partner withdrawal, entitling Linden to damages (and disgorgement of $35,000) | Court affirmed: Linden failed to prove damages traceable to Zenith’s breaches; post‑trial fiduciary/disgorgement theory was not raised below and is unreviewed |
| Whether the trial court erred in awarding attorney fees to Zenith under the DSA | Zenith entitled to fees as prevailing party under DSA fee clause | Linden opposed | Court affirmed: Zenith was prevailing party; DSA fee provision authorized fees (appeal fees to be awarded on application) |
Key Cases Cited
- DC Farms, LLC v. Conagra Foods Lamb Weston, Inc., 179 Wn. App. 205 (Wash. App. 2014) (material breach may excuse other party’s performance)
- Wlasiuk v. Whirlpool Corp., 81 Wn. App. 163 (Wash. App. 1996) (material‑breach defense is an affirmative defense; defendant bears burden)
- Willener v. Sweeting, 107 Wn.2d 388 (Wash. 1986) (concurrent conditions and consequences when both parties fail to perform)
- Sunnyside Valley Irrig. Dist. v. Dickie, 149 Wn.2d 873 (Wash. 2003) (definition of substantial evidence standard)
- Taplett v. Khela, 60 Wn. App. 751 (Wash. App. 1991) (absence of trial finding is presumptively negative against party with burden)
- Wallace Real Estate Inv., Inc. v. Groves, 124 Wn.2d 881 (Wash. 1994) (anticipatory breach and excuse of performance)