Appellants tell appeals court trial judge rewrote dock agreement, courts should reverse or remand

Appellants Sway and Lou asked an appellate panel to overturn a lower court's summary-judgment decision in their dispute with Molina Lynn over a dock-extension agreement, arguing the trial court rewrote the parties' 10/25/2022 contract and improperly required them to keep seeking permit extensions when further applications were futile.

"In ruling on summary judgment, the trial court made three critical errors," Matthew Kennedy, counsel for the appellants, told the judges. He listed those errors as: (1) treating the contract as if it included a condition precedent to performance that the written agreement does not contain; (2) ignoring two years of Ms. Lynn's alleged bad-faith breaches of other contract provisions; and (3) penalizing his clients by requiring additional permit extensions beyond the point where further filings were futile.

Kennedy said the record shows Ms. Lynn withheld cooperation under the agreement'including failing to provide timely signatures and not re-notarizing a document she had previously signed'and that she wrote the City of Mercer Island in July 2023 demanding a recorded easement before consenting to the extension, which appellants say amounted to a condition precedent and to obstructing the permit process. "She was holding out and failing to perform under the contract because she wanted a document recorded first," Kennedy said.

A judge on the panel pressed counsel on whether futility justified stopping repeated permit applications. "So why wouldn't you keep applying to keep it open?" the judge asked. Kennedy replied that after two years of alleged noncooperation, his clients reasonably concluded further applications would be futile and sought relief in court. He said that if the appellate court reverses the summary judgment, the case should return to the trial court for damages or further proceedings.

Respondent's counsel, Katie Comstock, told the court the plaintiffs' requested relief at trial sought full use and access to Ms. Lynn's waterfront, including mortgage rights to the current dock extension, not a straightforward damages remedy. "They wanted all of her dock rights," Comstock said.

Comstock disputed that the record supports finding bad faith as a matter of law. She acknowledged good faith can be a question of fact for a jury, but told the panel the materials before the trial court showed the permit expired, the agreement required diligence in pursuing the permit, and appellants did not provide notarized, signed joint-use or consent documents required by city code. "With all the materials before the Court, at the end of the day it was that the permit expired and there was nothing else for the Court to enforce," Comstock said.

The panel and counsel also debated the legal effect of paragraph 14 of the October 2022 agreement, which contemplates drafting and recording amendments after the dock is built. Kennedy argued that paragraph did not give Ms. Lynn the right to demand a recorded easement before permitting; Comstock countered that the agreement left open many terms and that whether Ms. Lynn reasonably believed she was entitled to review drafts before providing consent is a jury question.

In rebuttal, Kennedy pointed the court to evidentiary materials in the clerk's papers, citing a February 7, 2023 email and attached dock plans that he said show Ms. Lynn had information about the proposed work but nonetheless sought additional conditions. Kennedy argued those documents support appellants' allegation of bad faith and their request either for reversal or remand for trial.

The panel did not announce a ruling. The clerk closed the morning docket and recessed the court.

(Reporting from the appellate argument: quotes and attributions come from counsel Matthew Kennedy (appellants) and Katie Comstock (respondent) and from questioning by the presiding judges.)