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Columbia Basin Fitness Club v. T.C. Investments11/30/1999
Columbia Basin Fitness Center (CBFC) offered to purchase property owned by T.C. Investments. Four of T.C. Investments' nine partners approved the sale. Although the partnership agreement provided that seven partners had to approve, only three partners were required to and did sign the earnest money agreement which bound the partnership to the sale. Thereafter, the four approving partners withdrew from the partnership pursuant to a withdrawal and release signed by all partners. The remaining five partners refused to follow through with the sale to CBFC, which subsequently prevailed in an action for specific performance.
The continuing partners filed suit against the withdrawing partners claiming breach of fiduciary duties. They also sued one of the withdrawing partners, Bill Alderson, for breach of his duties as the real estate agent on the property. They further claimed that Distinctive Properties, Mr. Alderson's real estate brokerage firm, was vicariously liable for his breach of duties. Finding the release discharged the withdrawing partners and Distinctive Properties from liability, the court granted their motion for summary judgment and denied that of the continuing partners. The court awarded fees to the withdrawing partners and Distinctive Properties as prevailing parties. Contending the court erred by (1) determining the release was a valid and enforceable agreement discharging all parties, (2) denying its motion for summary judgment, and (3) awarding attorney fees to Distinctive Properties, the continuing partners appeal. We affirm in part and reverse in part.
In May 1979, several individuals formed T.C. Investments, a general partnership with a 20-year term. The partners were James Jones, Walter Hadley, Roger Shaw, Richard and Drusilla Upton, Laurine Carey, Bill Alderson, Gary McEachern, Carlyle Clark, and Richard Perry.
T.C. Investments was created to purchase, possibly develop, and ultimately sell an undeveloped parcel of real property at Road 68 and Argent Street in Franklin County, Washington. T.C. Investments had purchased the property from Rolland and Barabara Hall on May 20, 1979, for $160,000, making a down payment of $35,000 and financing the remaining $125,000 over ten years at 6 percent interest. Under the terms of the real estate contract, the partnership was required to make monthly payments of $625. The remaining principal balance was due on June 20, 1989. On July 6, 1988, the parties modified the real estate contract to extend the principal payment deadline to June 20, 1999.
The T.C. Investments Partnership Agreement provided that "{a}ll decisions of the partnership shall require approval by seven (7) members then in good standing." But the agreement only required the signature of three partners to execute documents for the partnership.
In 1988, T.C. Investments listed the property for sale with Distinctive Properties, Inc. Partner Bill Alderson, the owner of and a broker with Distinctive Properties, was the listing agent for the property which was originally listed for $175,000. The price was eventually reduced to $150,000.
In November 1996, CBFC offered to purchase the property for $110,000. On November 19, 1996, Mr. Alderson, Mr. Perry, and Mr. Clark signed the earnest money agreement on behalf of T.C. Investments. Mr. Alderson also signed the agreement as the listing broker on behalf of Distinctive Properties. The earnest money agreement required the original sellers, the Halls, to reduce the remaining principal balance due on the real estate contract with T.C. Investments from $125,000 to $110,000. CBFC was required to give the Halls a $10,000 principal payment at closing and to pay all the closing cos
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