[No. 25076-8-III. Division Three. May 31, 2007.]
[2] Arbitration — Contractual Agreement — Enforcement — Burden of Proof. The party opposing enforcement of an arbitration agreement bears the burden of showing that the agreement is unenforceable. [3] Vendor and Purchaser — Earnest Money Agreement — Closing of Sale — Effect. After a purchase and sale contract for real property is executed, the closing of the sale is the fulfillment of the obligations created by the contract. [4] Landlord and Tenant — Option To Purchase — Closing of Sale — Necessity. Under an option to purchase land requiring delivery of written notice of exercise of the option and closure of the sale by specified dates, the requirements for exercise of the option are not fulfilled if the parties have not proceeded to closing by the specified date, such as by tender of the purchase price or initiation of closing proceedings. [5] Appeal — Findings of Fact — Substantial Evidence — Necessity. Findings of fact must be supported by substantial evidence in the record. [6] Arbitration — Contractual Agreement — Enforcement — Termination or Lapse of Contract — Effect. A contractual arbitration clause no longer has any force or effect if the rights and obligations created by the contract have terminated or lapsed. [7] Lis Pendens — Quashing — Review — Standard of Review. A trial court's decision to quash a lis pendens is reviewed for an abuse of discretion. Discretion is not abused if the court has a tenable basis for quashing the lis pendens. [8] Lis Pendens — Quashing — Justification — No Valid Dispute Over Ownership. A lis pendens filed against property is properly quashed if there is no valid dispute regarding ownership of the property. [9] Costs — Attorney Fees — Contractual Right — Prevailing Party — In General. RCW 4.84.330 provides for an award of attorney fees and costs to the "prevailing party" in an action on a contract if the contract contains an attorney fee clause. [10] Costs — Attorney Fees — On Appeal — Prevailing Party — Necessity. An appellate court may decline to award attorney fees under RAP 18.1 to a nonprevailing party. Nature of Action: The tenant under a lease that contained an option to purchase and an arbitration clause sought arbitration of a claim pertaining to the option after a writ of restitution was issued to the landlords in an unlawful detainer action. The plaintiff also filed a lis pendens. Superior Court: The Superior Court for Spokane County, No. 05-2-05650-3, Salvatore F. Cozza, J., on March 10, 2006, entered a judgment in favor of the landlords, ruling that the option had expired, cancelling the lis pendens, and granting attorney fees to the landlords. Court of Appeals: Holding that the tenant's arbitration application was properly denied because the option to purchase was not exercised and had lapsed, that the court had a tenable basis to quash the lis pendens, that the landlords were entitled to an award of attorney fees and costs, and that the tenant was not entitled to an award of attorney fees on appeal, the court affirms the judgment. Paul J. Allison-, for appellant. Eric R. Shumaker-, for respondents. ¶1 BROWN, J. — John and Min Ha leased the Otis Hotel to Otis Housing Association, Inc. (OHA), with an option to purchase and a mandatory arbitration clause. When OHA did not make their lease payments, the Has successfully sued for unlawful detainer. OHA then sought to arbitrate and filed a lis pendens. Deciding the option had expired, the court denied OHA's application, canceled the lis pendens, and granted attorney fees. OHA appealed. Finding no error, we affirm. FACTS ¶2 In 1997, OHA and the Has entered into an option to purchase, with OHA agreeing to purchase a Spokane property known as the Otis Hotel and parking lot for $1.3 million. The agreement included attorney fee provisions and an arbitration clause, partly stating: In the event that a dispute should arise under this agreement, as a condition precedent to suit, the dispute shall be submitted to arbitration in the following manner: The party seeking arbitration shall submit to the other party a statement of the issue(s) to be arbitrated and shall designate such party's nominated arbitrator. Clerk's Papers (CP) at 26. The clause set a specific procedure for selecting arbitrators. ¶3 The parties agreed OHA would lease the property for $5,000 per month until it exercised its option to purchase. In February 2001, they agreed to extend the option to purchase with closing to occur no later than December 31, 2001. OHA then began making $7,500 monthly payments: $5,000 for the lease and $2,500 toward the purchase price. The parties did not close by December 31, 2001. ¶4 In December 2002, the parties entered into a "Third Addendum To Real Estate Option To Purchase." CP at 29. The parties agreed, "OHA has not exercised the Real Estate Option to Purchase for the leased premises." CP at 32. They modified the option term so that the option could be exercised before December 1, 2004 with closing no later than December 31, 2004. Credit was to be given for the $2,500 monthly installment payments; however, the parties agreed if OHA did not exercise its option to purchase, "such sums shall be deemed forfeited to HA." CP at 32. The sale did not close in 2004. ¶5 In 2005, OHA stopped paying the Has. The Has sued for unlawful detainer. Although the Has received OHA's answer, apparently OHA neglected to file it with the court. OHA claimed it had exercised its option. On October 14, after argument, the court issued a writ of restitution. ¶6 On October 22, 2005, OHA demanded arbitration. On November 22, 2005, OHA applied for a court order directing the Has to proceed with arbitration and filed a lis pendens. On December 2, 2005 OHA sent a "Notice Of Intention To Arbitrate." CP at 8. Apparently hearing nothing from the Has, OHA applied for the appointment of an arbitrator. ¶7 The court found "[OHA] materially failed to timely exercise and/or close the Option to Purchase." CP at 74. The court further found OHA previously sought relief in the unlawful detainer action. The court awarded $3,975.00 in attorney fees and $429.35 in costs for the Has. After OHA's reconsideration motion was denied, it appealed. ANALYSIS ¶8 The issue is whether the trial court erred in denying OHA's application for arbitration and canceling the lis pendens. ¶10 Initially, the Has argue dismissal is warranted because OHA did not sufficiently challenge the trial court's findings of fact. However, OHA challenged all of the trial court's findings in the assignment of error section of its brief and provided meaningful argument in the argument section of its brief. Thus, review is warranted. ¶12 The parties entered into a third addendum to real estate option to purchase, agreeing, "OHA has not exercised the Real Estate Option to Purchase for the leased premises." CP at 32. They agreed to modify the option term so that the option could be exercised anytime before December 1, 2004, with closing no later than December 31, 2004. If OHA did not exercise its option, it agreed the monthly installment payment would "be deemed forfeited to HA." CP at 32. ¶13 The court found OHA failed to exercise its option by the December 1, 2004 deadline. Findings of fact must be supported by substantial evidence. Nordstrom Credit, Inc. v. Dep't of Revenue, 120 Wn.2d 935, 942, 845 P.2d 1331 (1993). The record does not contain written notice showing OHA exercised its option after the third addendum to the option contract was executed. OHA did not tender the purchase price or initiate closing proceedings causing the option to lapse. The option to purchase, including the arbitration clause, no longer had any force or effect; thus, it was void. ¶14 RCW 4.28.320 permits the plaintiff in an action affecting the title to real property to file a notice of the pendency of the action with the auditor of the county in which the property is situated. A lis pendens has the effect of providing constructive notice of the action to a subsequent purchaser or encumbrancer. ¶16 In sum, the trial court did not err in denying OHA's application for arbitration and canceling the lis pendens. Accordingly, we do not discuss the alternative arguments for affirming suggested by the Has and turn to attorney fees and costs. ¶19 Affirmed. SWEENEY, C.J., and KULIK, J., concur. Reconsideration denied August 9, 2007.