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CPL (Delaware) LLC v. Conley2/15/2002
The trial court resolved this dispute between Quad C Health Care Centers, the seller of nursing facilities, and CPL (Delaware) LLC, the purchaser of those facilities, by granting summary judgment to Quad C. Finding no disputed issues of material fact, we affirm. We also affirm the trial court's denial of Quad C's request for attorney fees.
FACTS
In April 1998, CPL entered into purchase agreements to buy skilled nursing facilities from Quad C. CPL agreed to pay $48 million for the facilities plus an additional 'earnout payment,' contingent on 1998 earnings meeting a certain target level. The parties developed a formula to calculate earnings before interest, taxes, depreciation, amortization, rent and central office charges (EBITDAR).
To calculate the EBITDAR, Quad C provided financial statements for the facilities from January 1, 1998, to the July 1, 1998, closing date; CPL did the same after closing. In late March 1999, the parties signed a Memorandum Agreement under which CPL agreed to pay a $2,017,468 earnout payment on or before April 1, 1999.
About three months after the payment date, CPL notified Quad C that it had discovered 'computational and arithmetic errors' resulting in an incorrect EBITDAR calculation. II Clerk's Papers (CP) at 302. Claiming that Quad C was not entitled to an earnout payment, CPL demanded a refund of the timely payment that it had made.
Quad C responded:
In March 1999, the parties calculated the Earnout Payment, negotiated an agreement on the amount of this payment, and entered into a Memorandum Agreement acknowledging both the amount of the payment and that the parties had no further obligation between them with respect to the Earnout Amount. Relying on that memorandum agreement, Quad-C distributed proceeds of the Earnout Payment to others involved in the transfer of the Quad-C facilities, pursuant to its agreements with these individuals. II CP at 304.
Quad C claimed that the Memorandum Agreement was an accord and satisfaction and it refused to refund CPL's payment.
CPL sued to obtain a $1,993,360 refund. In its complaint, CPL alleged that the overpayment was the result of a mutual mistake as to the facilities' earnings, that Quad C had fraudulently or negligently withheld facts from CPL, and that Quad C had acted inequitably. After Quad C moved for summary judgment, CPL asked the court to compel arbitration of the EBITDAR calculation pursuant to the parties' purchase agreements.
The trial court denied CPL's motion to compel arbitration, granted Quad C's summary judgment motion, and denied Quad C's later request for attorney fees. CPL appeals the summary judgment order and the denial of its motion to compel arbitration. Quad C cross-appeals the court's denial of its request for attorney fees.
I. Alleged Overpayment
Summary judgment is appropriate if the evidence, viewed in the nonmoving party's favor, shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. CR 56(c); Schaaf v. Highfield, 127 Wn.2d 17, 21, 896 P.2d 665 (1995). A material issue of fact is one upon which the litigation's outcome depends. Capitol Hill Methodist Church v. City of Seattle, 52 Wn.2d 359, 364, 324 P.2d 1113 (1958). The court should grant the motion if reasonable persons could reach only one conclusion. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982).
A. Mutual Mistake and Assumption of the Risk
CPL asserts that the parties were mutually mistaken about the correct EBITDAR figure and that this figure was an essential fact in the formation of the
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