Filed
Washington State
Court of Appeals
Division Two
November 24, 2020
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
RODNEY R. PARR and LINDA J. PARR, No. 53640-4-II
husband and wife,
Appellants,
v.
HASELWOOD IMPORTS, INC., a PUBLISHED OPINION
Washington corporation; WILER
MANAGEMENT TRUST; HASELWOOD
FAMILY TRUST,
Respondents.
MELNICK, J. — Rodney and Linda Parr appeal the trial court’s summary judgment dismissal
of their breach of contract and accounting claims against Wiler Management Trust and Haselwood
Family Trust (hereafter collectively Haselwood).
The Parrs sold all of their shares in their Volkswagen dealership to Haselwood. The Parrs
argue that pursuant to the purchase and sales agreement (PSA), money the dealership received and
money it is owed from the settlement of a class action lawsuit against Volkswagen of America
(Volkswagen) belong to the Parrs. The Parrs also ask us to reverse the trial court’s grant of attorney
fees and costs to Haselwood. We conclude that the settlement payments belong to Haselwood
pursuant to the PSA, and we affirm.
53640-4-II
FACTS
On August 5, 2015, the Parrs entered into a PSA with Haselwood to sell all of their shares
in a Volkswagen dealership. The sale allowed the dealership to operate continuously without
interruption through the closing date. The purchase price consisted of both the tangible assets of
the business and the goodwill associated with the business. Because the dealership continued to
operate throughout the sale and closing period, the parties agreed to adjust the sale price to account
for income and expenses that existed prior to closing but would not come to or be paid by the
business until after closing. The PSA contained a provision to govern the allocation of the income
and expense:
10.7.2 The Parties recognize and agree that at Closing there will be items of income
and expense which will not have been received by and/or posted in the accounting
records of the Dealership[]. . . . Examples of these may be contracts in transit,
dealer rebates, factory holdbacks, accounts receivable for work performed, sales
made, etc., prior to the date of Closing. Examples of expense items are such things
as rebates due customers, refunds due customers, customer deposits, purchases on
account received, but not yet paid, etc. It is the intention of the Parties that the sale
price of the Dealership[] shall be increased by all such items of income and
decreased by all such items of expense. Accordingly, as soon as practical after
Closing, Peterson Sullivan, LLP, Certified Public Accountants, Seattle,
Washington, shall determine the necessary adjustments to the purchase price of the
Dealership[] as a result of these items of income and expense. The amount so
determined shall be paid by the Party owing a net positive amount to the other by
bank wire transfer within five (5) days of the determination of the net amount due.
Clerk’s Papers (CP) at 115.
Under the PSA, accounts receivable was defined as: “all amounts due the Dealership[] . . .
on account of services rendered, parts or accessories sold or delivered, used or new vehicles sold
or delivered, receivables due from the Franchisor, and all other accrued monetary claims or money
due the Dealership[] . . . as of the Closing Date with regard to the Business.” CP at 89.
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The closing memorandum and agreement contained a section entitled “Lawsuits” that listed
three pending lawsuits in which the Parrs were a party. The section concluded that the Parrs “agree
. . . to pursue each of these matters. . . . At the conclusion of each of these lawsuits the resulting
amounts receivable and amounts payable shall be subject to the post-closing provision below.” CP
at 82.
In September 2015, the United States Environmental Protection Agency issued a notice of
violation to Volkswagen that alleged the company installed devices in certain cars to evade the
emission control system. The Parrs learned about the notice of violation when it first become
public, around September 18, 2015. However, the violation “was not an issue” when the parties
were negotiating the PSA. CP at 65. The sale of the dealership closed on December 10, 2015.
The purchase price did not change because of the violation.
In April 2016, three Volkswagen dealerships filed a class action lawsuit on behalf of all
Volkswagen dealerships in the United States.1 In re Volkswagen “Clean Diesel” Mktg., Sales
Practices, & Prods. Liab. Litig., 229 F. Supp. 3d 1052, 1058 (N.D. Cal. 2017). The complaint
alleged that the dealerships lost significant value in the loss of goodwill and profits from the
unsellable cars as a result of emissions scandal. Am. Compl. at 1, In re Volkswagen “Clean
Diesel” Mktg., Sales Practices, & Prods. Liab. Litig., MDL No. 02672-CRB (JSC) (N.D. Cal.
Sept. 30, 2016) (hereafter Volkswagen Litigation),
https://www.hbsslaw.com/sites/default/files/case-downloads/vw-
dealers/amendedandconsolidatedclassactioncomplaint-redacted-57f43b511c20b.pdf. The
1
The Case was originally filed in the Northern District of Illinois then was transferred by the
United States Judicial Panel on Multidistrict Litigation to the United States District Court for the
Northern District of California.
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53640-4-II
complaint also alleged that Volkswagen had, independent from the emissions issues, engaged in
“illegal pricing and allocation schemes, and coercion to use Volkswagen Credit.” Am. Compl. at
1, Volkswagen Litig.
In October 2016, the federal court granted preliminary approval of a settlement agreement
and approved notice to the proposed class.2 The settlement agreement defined the class as “all
authorized Volkswagen dealers in the United States who, on September 18, 2015, operated a
Volkswagen branded dealership pursuant to a valid Volkswagen Dealer Agreement.” In re
Volkswagen, 229 F. Supp. 3d at 1058. The settlement entitled each class member to payments
“intended as compensation to Dealer Settlement Class Members for alleged diminution in value
of the capital and goodwill in their franchises resulting from the TDI Matter and other alleged
action or inaction by Volkswagen to the extent such action or inaction is covered in the Released
Claims.” Final Settlement Agreement at 12-13, Volkswagen Litig. (N.D. Cal. Sept. 30, 2016),
https://www.hbsslaw.com/sites/default/files/case-downloads/vw-dealers/final-settlement-
agreement.pdf.
2
The final settlement agreement was not approved until January 2016, but dealerships, including
Haselwood, could submit their claim prior to that time. In re Volkswagen “Clean Diesel” Mktg.,
Sales Practices, & Prod. Liab. Litig., 2016 WL 6091259 (N.D. Cal. Oct. 18, 2016).
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53640-4-II
In exchange for receiving the funds, the settlement required class members to release any
claims related to the emissions scandal as well as claims related to illegal pricing and coercion. 3
The final settlement agreement discussed the claims and alleged damage resulting from the
emissions issue. It mentioned the claims not related to the emissions scandal once but did not
otherwise discuss them. Final Settlement Agreement at 20, Volkswagen Litig.
Haselwood submitted the required forms to Volkswagen to claim the settlement amount.
Haselwood subsequently received a payment from the settlement. Other payments would be
forthcoming.
In February 2017, the Parrs submitted forms to Volkswagen to claim the settlement
payments. Volkswagen denied the request for three reasons. First, the Parrs did not have the
authority to execute a release on behalf of the dealership that they no longer owned. Next,
“[b]ecause [Volkswagen] settled with and agreed to pay Volkswagen dealerships in operation as
of September 18, 2015, rather than the owners of Volkswagen dealerships in operation as of
September 18, 2015, you are not a class member and have no claims to any of the settlement funds
3
(2) all claims related in any way to [Volkswagen Group of America, Inc.’s]
previously announced goals or objectives for [United States] sales volume
growth[,] . . . (3) all claims for monetary damages arising before the Effective Date
of the Franchise Dealer Class Agreement that relate in any way to allocation
complaints or irregularities[,] . . . (4) all claims for monetary damages arising before
the Effective Date of the Franchise Dealer Class Agreement that relate in any way
to the method upon which [Volkswagen Group of America, Inc.] measures the sales
and service performance of its Volkswagen-branded franchise dealers or sets the
sales and service objectives for its Volkswagen-branded franchise dealers[,] . . . and
(5) all discrimination or coercion claims arising before the Effective Date of the
Franchise Dealer Class Agreement related in any way to the sale, incentivization or
use of [VCI Loan Services, LLC] wholesale and retail financing products
(collectively, the "Released Claims").
CP at 203.
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owed to the authorized dealership.” CP at 515. Lastly, Volkswagen informed the Parrs that it
already “fulfilled its current obligations under the Agreement . . . because it has already made the
settlement payments due to the dealership entity, not the current or former owners of the
dealership.” CP at 515.
Soon thereafter, the Parrs requested that Haselwood send them the settlement amount in
accordance with the PSA. Haselwood refused.
In September, the Parrs filed a complaint, alleging that Haselwood breached the PSA by
refusing to allocate the Volkswagen settlement payments to the Parrs as required by section 10.2.7
of the PSA. The Parrs also requested a full accounting of any money received by Haselwood in
payment for the settlement, and any payment received as a result of the emission problems with
Volkswagen brand vehicles.
Haselwood moved for summary judgment. In support of its motion, Haselwood submitted
an opinion by Drew Voth, a financial expert. Voth opined that generally accepted accounting
principles (GAAP) supported excluding the Volkswagen settlement payments in the post-closing
adjustments. According to Voth, the Volkswagen settlement payments were a type of contingent
income known under GAAP as a “gain contingency.” A gain contingency is “[a]n existing
condition, situation, or set of circumstances involving uncertainty as to possible gain to an entity
that will ultimately be resolved when one or more future events occur or fail to occur.” CP at 368.
In support of the motion, Haselwood also submitted a copy of a valuation analysis of the
dealership from August to December 2015. The analysis concluded that the dealership’s goodwill
was “minimally impacted” by the emissions scandal between August and December 2015, the
closing period. CP at 251. Haselwood also submitted an industry publication analyzing auto
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dealership markets. It showed that, at the end of 2016, Volkswagen had a goodwill factor near the
bottom of its industry class.
Haselwood also provided excerpts of Parr’s deposition. Parr admitted that he did not suffer
any damage from the emissions scandal, because when people purchased cars from the dealership
under his ownership, they did so without knowing that the cars contained devices that evaded the
emission control system.
In opposition to the motion for summary judgment, the Parrs submitted a declaration by
Chris Russel, the managing partner of the Parrs’ accounting firm. Russel stated that “Peterson
Sullivan, LLP was never asked, nor did [it] ever undertake to determine which of the parties to this
lawsuit was entitled to any funds from Volkswagen or as a result of the class action lawsuit
involving the Volkswagen diesel emissions scandal.” CP at 452. The Parrs also included the
declaration of Michael Massey, an accountant. CP at 457. He agreed with Voth that “GAAP
requires that the [Volkswagen] Settlement Payment should not be recorded on the books of the
Company until December 19, 2016, when the dealership actually began receiving payments.” CP
at 457. However, 10.7.2 requires that items of income not yet received by the closing date be part
of the price adjustment. Therefore, he asserted that “[GAAP] only determines when the payment
is to be recorded on the books of the company. It is Section 10.7.2 of the PSA that determines
which of the parties is entitled to the money.” CP at 457-58.
The court granted Haselwood’s motion for summary judgment and dismissed the claim. It
ordered that Haselwood, as the prevailing party, was entitled to reasonable attorneys’ fees and
costs. The Parrs appeal.
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53640-4-II
ANALYSIS
I. BREACH OF CONTRACT
The Parrs argue that there are genuine issues of material fact regarding whether Haselwood
breached the PSA. All of their arguments involve interpretation of the PSA. First, they contend
that the settlement proceeds are properly classified as income belonging to the Parrs under the
PSA. They also assert that because the original lawsuit brought claims related to conduct arising
prior to closing, the settlement proceeds constitute income under the PSA.4 Finally, the Parrs argue
that the conduct of the parties shows that they intended the settlement payments to be classified as
income. The Parrs also ask us to reverse the trial court’s award of attorney fees and costs. We
disagree with the Parrs and conclude that the settlement payments do not constitute income owed
to the Parrs under the PSA.
We review a trial court’s decision to grant summary judgment de novo, performing the
same inquiry as the trial court. Lakey v. Puget Sound Energy, Inc., 176 Wn.2d 909, 922, 296 P.3d
4
The release agreement required class members to release any claims related to the emissions
scandal as well as claims related to illegal pricing and coercion. However, the Parrs’ arguments
before the court below did not mention the claims unrelated to the emissions issues. In the response
to Haselwood’s motion for summary judgment, the Parrs only mentioned the settlement amount
in relation to “defective emission devices on some of the vehicles the dealerships had purchased
as of September 18, 2015.” CP at 373. Additionally, at the hearing before the court on the
summary judgment motion, the Parrs did not mention the claims unrelated to the emissions
violation. The court stated that the purpose of the settlement was to compensate for the impact of
the emissions violations, including the decrease in good will of Volkswagen dealerships.
RAP 9.12 provides that “[o]n review of an order granting or denying a motion for summary
judgment the appellate court will consider only evidence and issues called to the attention of the
trial court.” It is for this reason that “[i]ssues and contentions neither raised by the parties nor
considered by the trial court when ruling on a motion for summary judgment may not be considered
for the first time on appeal.” Cano–Garcia v. King County, 168 Wn. App. 223, 248, 277 P.3d 34
(2012). We decline to consider the Parrs’ argument that the settlement proceeds constitute income
under the PSA because the original lawsuit brought claims related to conduct arising prior to
closing and unrelated to the emissions violation.
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860 (2013). Summary judgment is appropriate where there are “‘no genuine issues of material
fact and the moving party is entitled to judgment as a matter of law.’” Puget Sound Energy, Inc.,
176 Wn.2d at 922 (quoting Qwest Corp. v. City of Bellevue, 161 Wn.2d 353, 358, 166 P.3d 667
(2007)).
The primary goal in interpreting a contract is to ascertain the intent of the parties, which
we determine by focusing on the objective manifestation of the parties in the written agreement
rather than the unexpressed subjective intent of either party. Hearst Commc'ns, Inc. v. Seattle
Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005). Where the contract language is clear, the
intent is ascertained from the language of the contract as a question of law. In re Estates of Wahl,
99 Wn.2d 828, 831, 664 P.2d 1250 (1983).
Accordingly, “a court considers only what the parties wrote; giving words in a contract
their ordinary, usual, and popular meaning unless the agreement as a whole clearly demonstrates
a contrary intent.” 4105 1st Ave. S. Invs., LLC v. Green Depot WA Pac. Coast, LLC, 179 Wn.
App. 777, 784, 321 P.3d 254 (2014). Even without ambiguity, however, “extrinsic evidence is
admissible as to the entire circumstances under which the contract was made, as an aid in
ascertaining the parties’ intent.” Berg v. Hudesman, 115 Wn.2d 657, 667, 801 P.2d 222 (1990).
Although the Parrs state that there are genuine issues of material fact remaining, they argue
that the terms of the PSA dictate that the settlement payments are income. Interpretation of the
language of the contract is a question of law. Wahl, 99 Wn.2d at 831. At issue is whether the
settlement payments from Volkswagen qualify as income under section 10.7.2 of the PSA.
The PSA does not define income but instead gives examples: “contracts in transit, dealer
rebates, factory holdbacks, accounts receivable for work performed, sales made, etc., prior to the
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date of Closing.” CP at 115. The only conceivable categories the settlement could fall under are
accounts receivable or “etc.”
The PSA defines accounts receivable as: “all amounts due the Dealership[] . . . on account
of services rendered, parts or accessories sold or delivered, used or new vehicles sold or delivered,
receivables due from the Franchisor, and all other accrued monetary claims or money due to the
Dealership[] . . . as of the Closing Date with regard to the Business.” CP at 89. The sale of the
dealership closed on December 10, 2015.
In October 2016, the federal court granted preliminary approval of a settlement agreement
and approved notice to the proposed class. In re Volkswagen “Clean Diesel” Mktg., Sales
Practices, & Prod. Liab. Litig., 2016 WL 6091259 (N.D. Cal. Oct. 18, 2016). The federal court
approved the final settlement agreement in January 2017. In re Volkswagen, 229 F. Supp. 3d 1052.
Both of these events occurred after the sale of the dealership closed.
Even if a settlement agreement could be considered income under the PSA, the
Volkswagen settlement does not because it does not fall within the definition of accounts
receivable. The payments did not and could not possibly have accrued or been due prior to the
closing date.5 Further, a settlement resulting from a then non-existent lawsuit is entirely unlike
the “work performed” or “sales made” that precede the word “etc.” which in any case is also
5
The term “accrue” has different meanings. In a legal sense, for example, it means when a claim
begins for statute of limitations purposes. A cause of action accrues, generally speaking, when a
party has the right to apply to a court for relief. Malnar v. Carlson, 128 Wn.2d 521, 529, 910 P.2d
455 (1996). According to Investopedia, in a financial sense, “[t]he term ‘accrue,’ when related to
finance, is synonymous with an ‘accrual’ under the accounting method outlined by Generally
Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).
An accrual is an “accounting adjustment used to track and record revenues that have been earned
but not received, or expenses that have been incurred but not paid.” Something is “accrued”
financially when it is earned. Accrue, INVESTOPEDIA,
https://www.investopedia.com/terms/a/accrue.asp (last updated July 30, 2020).
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cabined by “prior to the date of Closing.” CP at 115. Under the principle of ejusdem generis, a
general term used in conjunction with specific terms will be deemed to include only those things
that are in the same class or nature as the specific ones. Simpson Inv. Co. v. Dep't of Revenue, 141
Wn.2d 139, 151, 3 P.3d 741 (2000) (discussing the maxim as a rule of statutory interpretation);
Kitsap County v. Allstate Ins. Co., 136 Wn.2d 567, 590-91, 964 P.2d 1173 (1998) (discussing the
maxim as a principle of contract interpretation). Unlike the enumerated items of income identified
in section 10.7.2 or identified in the definition for accounts receivable, the Volkswagen settlement
proceeds were neither identifiable nor quantifiable on the date of closing.
In the closing memorandum and agreement, the parties accounted for money payable to
the Parrs arising from lawsuits that were already pending at the time of closing. That section
provides that “[a]t the conclusion of each of [the three listed] lawsuits, the resulting amounts
receivable and amounts payable shall be subject to the post-closing provision.” CP at 82. The
parties demonstrate that they knew how to make provisions for proceeds from lawsuits. Had they
contemplated a settlement arising from an anticipated lawsuit, they would have included language
that provided for it, but they did not.
The Parrs assert that the settlement payments meet the definition of accounts receivable
because the payments are receivables due from the Franchisor “‘as of September 18, 2015.’” Br.
of Appellant at 20 (quoting CP at 515). The payments were due on that date, according to Parr,
because the lawsuit defined the class as all authorized Volkswagen dealers who operated a
dealership on September 18, 2015, and Parr owned the dealership on that date.
This argument fails for at least two reasons. First, the defined class does not change the
fact that the payments from the settlement agreement were not due to the dealership prior to
closing. The settlement occurred well after the closing date. Second, the final settlement
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agreement makes clear that the payments were “intended as compensation for alleged diminution
in value of franchise dealers’ capital and goodwill.” Final Settlement Agreement at 4, Volkswagen
Litig. The alleged diminution in value did not occur on September 18, 2015 or even shortly
thereafter. Parr admitted that he did not suffer any injury because of the emissions scandal. The
valuation of the dealership shows that there was no harm done to the dealership between September
and December 2015. The Parrs were not the owners when Volkswagen dealerships felt the effects
of the violation. Therefore, the compensation for those effects cannot be “due” to the Parrs
regardless of the date in the class definition.
Finally, the Parrs argue that the conduct of the parties, specifically the fact that after the
closing date the parties made adjustments to the purchase price under 10.7.2, shows that they
intended for the settlement to be classified as income under that provision and thus, a genuine issue
of material fact remains. However, because the language of the PSA is clear, we do not need to
consider the conduct of the parties to interpret it. Wahl, 99 Wn.2d at 831.
We conclude that the trial court did not err in granting summary judgment to Haselwood
because the Volkswagen settlement payments are not owed to the Parrs under the terms of the
PSA. Accordingly, the superior court’s grant of attorney fees and costs to Haselwood as the
prevailing party was also proper.6
6
The PSA provides “[i]n any action brought to enforce any provision of this document, the
prevailing party shall be entitled to receive from the other party all reasonable costs and reasonable
attorneys’ fees incurred by the prevailing party.” CP at 121
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II. ACCOUNTING
The Parrs assert that Haselwood refused to inform them of the exact amount of the
settlement funds Haselwood received; therefore, the Parrs are entitled to an accounting because
the exact amount of income properly allocated to the Parrs is complicated. We disagree.
“‘[A] complaint for an accounting must show by specific averments that there is a fiduciary
relation existing between the parties, or that the account is so complicated that it cannot
conveniently be taken in an action at law. And it must allege that the plaintiff has demanded an
accounting from the defendant, and the latter's refusal to render it.’” Corbin v. Madison, 12 Wn.
App. 318, 327, 529 P.2d 1145 (1974) (internal quotation marks omitted) (quoting State v. Taylor,
58 Wn.2d 252, 262, 362 P.2d 247 (1961)).
Because the Parrs are not entitled to the settlement payments under the PSA, they have no
interest in the allegedly complicated account and are thus not entitled to an accounting of the
settlement funds.
We affirm.
Melnick, J.
We concur:
Worswick, P.J.
Glasgow, J.
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