       IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

MUKILTEO RETIREMENT
APARTMENTS, LLC, a Washington                      DIVISION ONE
limited liability company,
                                                   No. 69039-6-1
              Respondent,

                                                   PUBLISHED IN PART OPINION

MUKILTEO INVESTORS LP., a
Washington limited partnership;
CAMPBELL HOMES CONSTRUCTION,
INC., a Washington corporation,

              Appellant.                           FILED: August 19, 2013


       Dwyer, J. — Rule of Appellate Procedure (RAP) 2.5(a)(2) permits an

appellant to claim as error, for the first time on appeal, the "failure to establish

facts upon which relief can be granted." While functioning as an exception to the

general rule that we do not consider new theories and arguments on appeal, the

rule's applicability is limited to circumstances wherein the proof of particular facts

at trial is required to sustain a claim. Where "relief can be granted" in the

absence of such proof, RAP 2.5(a)(2) does not operate to permit a claimant to
No. 69039-6-1/2



argue for the first time on appeal that particular facts were not established at trial.

       In this case, Mukilteo Retirement Apartments LLC (MRA) filed a lawsuit for

the specific performance of an option agreement that granted MRA the right to

purchase a retirement facility from Mukilteo Investors Limited Partnership (MILP).

In turn, MILP counterclaimed against MRA, contending that MRA had breached

the option agreement by declining to accept MILP's proposed purchase price.

Following a bench trial, the trial court determined that MILP had breached the

option agreement. The court thereafter entered a decree of specific performance

requiring MILP to sell the facility to MRA.

       On appeal, MILP contends, for the first time in over three years of

litigation, that the option agreement was unenforceable because the parties failed

to reach mutual assent regarding a method for determining the facility's purchase

price. The issue of the contract's enforceability, however, was neither raised

within the pleadings of the parties nor litigated at trial by either implied or express

consent. Accordingly, MRA was not required to introduce any evidence in order

to prove the existence of an enforceable contract. Because, in such

circumstances, RAP 2.5(a)(2) does not permit an appellant to raise the question

of a contract's enforceability for the first time on appeal, MILP has failed to

demonstrate an entitlement to appellate review of this issue. MILP's additional

contentions are also without merit and, accordingly, we affirm the trial court in all

respects.

                                              I


       In 1997, Ron Struthers and Duane Clark purchased undeveloped real

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No. 69039-6-1/3



property in the Harbor Pointe area of Mukilteo. They formed Mukilteo Retirement

Apartments LLC for the purpose of developing the property into an independent

living and assisted living facility for seniors. Over the course of the following

year, Struthers and Clark secured the permits and obtained architectural plans

necessary to construct the facility.

       In the spring of 1999, Struthers and Clark realized they had insufficient

funds to complete construction of the facility. Accordingly, they contacted Carl

Campbell, whose construction company, Campbell Homes Construction Inc.,

was a leading builder of similar facilities in the Northwest. They discussed an

arrangement in which Campbell Homes would purchase the property, build the

facility, and then lease it back to MRA. Struthers and Clark told Campbell that

such an agreement must also include an option for MRA to purchase the facility

at a future date.

       Mukilteo Investors Limited Partnership was formed as the legal entity to

purchase, construct, and lease the facility back to MRA.1 On October 21, 1999,
following extensive negotiations, MILP agreed to purchase the property and

construct the facility. MRA signed a 20-year lease to staff and operate the

facility, including responsibility for all upkeep and maintenance. The lease

provided for annual increases in monthly rent beginning in the fifth year of




        1Ownership of MILP initially consisted of Campbell Homes (2 percent), Kris Campbell (49
percent) and HD Retirement Investors, LLC (49 percent). Campbell Homes was designated as
the general partner of MILP. Kris Campbell, the grandson of Carl Campbell, also served as the
vice president of Campbell Homes.
No. 69039-6-1/4



occupancy.2 Although MRA believed that these monthly rental payments
exceeded market rents, it agreed to the lease terms in order to secure a

contractual right to purchase the facility from MILP.

       Accordingly, the parties entered into an option agreement, giving MRA the

right to purchase the facility after eight years. The "facility" was defined as the

real property, as improved, together with certain personal property. The parties

agreed that the purchase price would reflect the highest of three pricing methods:

(1) the "fair market value" of the facility on the date the option was exercised, (2)

the "replacement cost" of the facility, or (3) the "prospective fair market value" set

forth in an attached exhibit (Schedule D), reflecting a base price with annual

increases of 3 percent.3
       The agreement specified that following MRA's exercise of the option,

MILP and MRA would have 15 days to reach agreement regarding the "fair

market value" of the facility. If no agreement could be reached within that time

period, each party would then have five additional days to appoint a disinterested

appraiser. Each appraiser would then have 30 days to appraise the facility's fair

market value. In the event that only one appraiser was appointed or only one

appraiser completed the appraisal within the 30-day period, that appraiser's

determination of fair market value would be "final and binding upon the parties."

        By contrast, "replacement cost" was to be determined by an appraiser of


        2 Keith Therrien, Campbell Homes' long-time attorney, drafted the agreements. MRA
also engaged an attorney, Ed Beeksma, to provide it with legal advice during the negotiations.
        3The parties and the trial court referto the attached exhibit as Schedule D. This
convention is also adopted herein.
No. 69039-6-1/5



MILP's choosing. MILP's selection of such an appraiser was to occur "pursuant

to" the same paragraph setting forth the procedure for appointing an appraiser to

determine "fair market value." Replacement cost was to be "included in the

appraiser's appraisal report on the Facility."

       The option agreement stipulated that MRA must exercise its option to

purchase the facility during the period beginning on the "eighth (8th) anniversary

of the commencement date of the Facility Lease Agreement" and ending on the

"first day of the twelfth (12th) month" following that anniversary. The facility lease

agreement stipulated that the lease term would commence upon the earlier of (1)

"the issuance of a certificate of occupancy" or (2) MRA taking possession for the

purpose of installing trade fixtures, personal property, and equipment for use in

the operation of the facility.

       MILP thereafter secured a loan and began construction. Following the

completion of the facility, MRA took possession on or around June 1, 2000. A

certificate of occupancy was issued by Snohomish County on June 15, 2000.

       MRA hoped to exercise its option to purchase the facility as soon as

possible. MRA believed that the commencement date for exercising the option

was October 21, 2007—eight years from the date of execution of the lease

agreement. Accordingly, on November 14, 2007, MRA sent notice to MILP that it

was exercising its option to purchase the facility. MRA noted its willingness to

negotiate a closing date but emphasized that time was of the essence. When

MILP did not respond, MRA sent a second letter on December 9, 2007, asking

MILP to confirm a purchase price of $16,024,643, the 2008 purchase price set

                                         -5-
No. 69039-6-1/6



forth by Schedule D. MRA explained that it was in the process of securing

financing.

       MILP replied by letter on December 28, 2007. The letter explained MILP's

position that the earliest the option could be exercised was June 15, 2008, eight

years after the date upon which the certificate of occupancy was issued. MILP

invited MRA to send another notice at that time.

       Nevertheless, on January 3, 2008, MILP retained an appraiser, James A.

Brown and Associates, to provide an "analysis of the facility lease agreement and

option agreement to determine the proper method of determining the option

purchase price underthe option agreement for the assets subjectthereto." MRA
was not informed that James Brown had been retained; nor was MRA provided a

copy of the report. Indeed, James Brown neither maintained a working file nor
prepared a written report detailing its conclusions with respect to this project.
       On February 21, 2008, MRA sent a draft purchase and sale agreement to

MILP, inviting further negotiation or revision "regarding closing dates, etc."4 MILP
responded to this letter on March 14, 2008, again rejecting MRA's attempt to

exercise the option as premature.5
       During this period, the ownership of MILP was being substantially

restructured. Kris Campbell and Campbell Homes were divested of their



       4The suggested purchase price contained in this document, $15,557,906, reflects the
purchase price of the facility set forth in Schedule Dfor 2007.
       5 MRA and MILP were unable to reach agreement regarding the date that MRA could
properly exercise its option. On November 30, 2010, the trial court determined thatthe option
period began on June 15, 2008, eight years from the date upon which the certificate ofoccupancy
was issued.
No. 69039-6-1/7



interests in MILP, and Cimco Properties, a wholly-owned entity of Thomas Dye,

became the new general partner. Keith Therrien and Les Powers, Campbell

Homes' long-time attorneys, also obtained substantial ownership interests in

MILP.


        Struthers and Clark met with Dye several times during the spring and

summer of 2008. They repeatedly noted MRA's desire to purchase the facility.

Nevertheless, although Dye stated that he wished to be accommodating and

acknowledged MRA's concerns over price, financing, and a closing date, he did

not offer to sell the facility. Instead, Dye presented a proposal whereby MRA

could obtain a 20 percent ownership interest in the facility.6 Struthers and Clark,
however, had no interest in this arrangement.

        On June 20, 2008, Dye persuaded Struthers and Clark to meet with him

again. Once again, there was no offer from MILP to sell the facility outright to

MRA. However, in this proposal, which assumed the facility's fair market value to

be $16.75 million, MILP offered to convey a larger ownership interest to MRA.

More importantly to Struthers and Clark, the proposal gave MRA the right to

purchase the entire facility through a second option agreement. After further

negotiations, Struthers and Clark agreed to purchase a 40 percent interest in the

Harbor Pointe facility with an option to purchase the remaining 60 percent at the

end of another ten years.

        For the next month and a half, Struthers and Clark heard nothing from

MILP regarding the status of this new agreement. Finally, on August 4, 2008,

        6This proposal noted that the facility's "assumed" fair market value was $18.24 million.

                                               -7-
No. 69039-6-1/8



Dye sent another proposal. This offer, however, differed substantially from the

previously agreed upon arrangement. Although the new proposal still included

the opportunity for MRA to acquire a 40 percent ownership interest in the facility,

it no longer included an option for MRA to purchase the remaining 60 percent of

the facility after ten years.

       On August 28, 2008, MRA filed suit for specific performance, monetary

damages, and declaratory relief.

       On September 17, 2008, MILP again engaged James Brown to perform a

fair market and replacement cost analysis of the facility. On October 10,

appraiser Aaron Brown, who was assigned to perform the analysis, sent a draft

report to MILP. Therrien reviewed the report and made a series of changes.

Most significantly, Therrien deleted Brown's inclusion of depreciation as a factor

for determining replacement cost, writing into the report that the option

agreement contemplated the replacement cost of an undepreciated facility. This

modification was later estimated to increase James Brown's valuation of the

facility by approximately $3 million. James Brown ultimately accepted all of

Therrien's changes.

       James Brown issued its final report on November 7, 2008, more than 30

days after MILP had engaged its services. Nevertheless, its transmittal letter

was backdated to October 10, 2008. In its report, James Brown opined that the

facility's fair market value was $24 million and that its undepreciated replacement

cost was $27 million.

        On November 10, 2008, MILP offered to sell the facility to MRA for $27
No. 69039-6-1/9



million, the facility's replacement cost as determined by James Brown. MILP

stated that this figure was "not subject to challenge."

        Both parties moved for summary judgment in March 2012. MRA sought a

determination that MILP had breached the option agreement by refusing to sell

the property except at the "replacement cost" determined by James Brown.

MILP, in turn, sought a determination that the option had been exercised by

MRA, and requested that the purchase price be set at $27 million. The trial court

denied both motions.

        A bench trial commenced in May 2012 and, after four weeks of testimony,

the trial court found in favor of MRA. MILP, the court determined, had breached

the implied covenant of good faith and fair dealing by deliberately attempting to

prevent MRA from purchasing the facility. The court further ruled that MILP had

breached the option agreement and that MRA was entitled to specific

performance and consequential damages. The trial court set the purchase price

of the facility at $18,725 million, which represented the midpoint between MRA's

appraisers' determinations of fair market value as of June 15, 2008. MRA was

allotted nine months from July 15, 2012 to close the transaction.7 As
consequential damages, the court awarded to MRA the amount of its rental

payments to MILP during the period of June 15, 2008 to July 15, 2012.

        MILP appeals.




         7The trial court ruled that MRA was obligated to continue to make lease payments from
July 15, 2012 until the date of closing. The court noted that itwould "retain jurisdiction to extend
the closing if circumstances warrant and upon such terms as may be warranted."
No. 69039-6-1/10




      MILP first contends that the trial court erred by enforcing the option

agreement after determining that there was no meeting of the minds with respect

to determining "replacement cost," one of three valuation methods contemplated

by the agreement for determining the purchase price of the facility. MILP asserts

that, although it admitted in its answer that the option agreement was a valid and

binding contract, RAP 2.5(a)(2)—which permits an appellant to raise, for the first

time on appeal, the "failure to establish facts upon which relief can be granted"—

entitles MILP to appellate review of this issue. However, in promulgating RAP

2.5(a)(2), our Supreme Court did not intend to render the civil rules of pleading

nullities. Where one party has expressly informed the other that it will not defend
on a particular basis (and trial thereafter proceeds as though the issue has been
definitively resolved), RAP 2.5(a)(2) does notfunction to permit an appellant to

raise the issue for the first time on appeal. Moreover, even had MILP properly

raised the issue of the contract's validity at trial, because the option agreement

included all the essential terms of a valid contract, the trial court did not err by

enforcing it. We discuss each of these determinations in turn.

                                           A


       Our Supreme Court has inherent authority to adopt procedural rules
necessary to the operation of the courts. State v. Edwards. 94 Wn.2d 208, 212,
616 P.2d 620 (1980). "As all court rules emanate from one source, it is

reasonable to conclude that when the Supreme Court promulgates a rule, it is

aware of all other rules and thus can avoid adopting contradictory rules."

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No. 69039-6-1/11



Hedlund v. Vitale, 110 Wn. App. 183, 188, 39 P.3d 358 (2002). Accordingly, in

interpreting the various court rules of our state, we presume that the Supreme

Court intended that such rules apply harmoniously.

       It is, of course, among the most fundamental rules of pleading that a

defendant's answer must "state in short and plain terms his [or her] defenses to

each claim asserted and [to] admit or deny the averments upon which the

adverse party relies." Civil Rule (CR) 8(b). If the defendant intends to deny only

a part of an averment, "he [or she] shall specify so much of it as is true and

material and shall deny only the remainder." CR 8(b). "The theory of Rule 8 is

that a defendant's pleading should apprise the plaintiff of the allegations in the

complaint that stand admitted and will not be in issue at trial and those that are

contested and will require proof to be established to enable plaintiff to prevail."

Yarnell v. Roberts, 66 F.R.D. 417, 423 (E.D. Pa. 1975). As the courts of our

state have long held, "'[t]he purpose of an answer is to formulate issues by

means of defenses addressed to the allegations of the complaint.'" Shinn

Irrigation Equip.. Inc. v. Marchand, 1 Wn. App. 428, 432, 462 P.2d 571 (1969)

(quoting Lopez v. United States Fid. &Guar. Co.. 18 F.R.D. 59, 61 (D. Alaska

1955)).

       Here, in its complaint, MRA alleged that "[t]he Option Agreement that

contains all material terms of the parties' obligations is a valid and binding

contract for plaintiff's option to purchase the real property." In its answer, MILP

agreed. MILP responded that it "admits the option agreement was a valid and

binding contract as between the parties." Indeed, in reliance upon the existence

                                        -11 -
No. 69039-6-1/12



of a valid option contract, MILP brought its own counterclaim, alleging that MRA

had breached the agreement by failing to pay the $27 million "replacement cost"

determined by its appraiser.

          MILP's answer informed MRA that the enforceability of the contract would

not be an issue at trial and that MRA need not offer any evidence to prove a valid

and binding contract containing the essential terms of the parties' bargain.

Rather, the issues to be litigated were limited to determining which party had

breached the agreement and what damages resulted therefrom. Although this

would require a determination of the meaning of the parties' contractual

agreement, the contract's enforceability was not an issue raised within the

pleadings.

          The civil rules of our state provide a specific mechanism for circumstances

where issues outside the pleadings arise at trial.8 CR 15(b) provides that "[w]hen


          8 MILP contends that, because MRA introduced evidence tending to disprove that the
parties manifested mutual assent to an essential term of the option contract, it is not bound by its
"judicial admission" that the contract was valid and binding. It asserts that it is well established
that a plaintiff waives reliance on a defendant's judicial admission where the plaintiff introduces
evidence that tends to disprove his or her own case.
          However, no court in our state has adopted such a rule. Indeed, as Justice Madsen has
noted, judicial admissions within a defendant's answer "have been defined as 'stipulations by a
partyor its counsel that have the effect of withdrawing a fact from issue and dispensing wholly
with the need for proofof the fact'" Key Design. Inc. v. Moser. 138 Wn.2d 875, 893, 983 P.2d
653, 993 P.2d 900 (1999) (Madsen, J, concurring in part and dissenting in part) (quoting 2
McCormick on Evidence: The Hearsay Rule and Its Exceptions § 254, at 142 (John W. Strong
ed., 4th ed.1992)). Such admissions are "'proof possessing the highest possible probative value.
Indeed, facts judicially admitted are facts established not only beyond the need of evidence to
prove them, butbeyond the power of evidence to controvert them.'" Best Canvas Prods. &
Supplies. Inc. v. Ploof Truck Lines. Inc.. 713 F.2d 618, 621 (11th Cir.1983) (emphasis added)
(quoting Hill v. Fed. Trade Comm'n. 124 F.2d 104, 106 (5th Cir.1941)). Thus, it is not true, as
MILP would have it, that all courts have considered a defendant's judicial admissions so easily
waived.
        More importantly, MILP's agreement that the option contract was a "binding and valid"
contract was more than a judicial admission as to a particular fact. Instead, as discussed above,
MILP's answer to MRA's averment formulated the issues that would be litigated at trial. Through

                                               -12-
No. 69039-6-1/13



issues not raised by the pleadings are tried by express or implied consent of the

parties, they shall be treated in all respects as ifthey had been raised in the

pleadings." "At the discretion of the trial court, the pleadings may be amended to

conform to the evidence at any stage in the action, including at the conclusion of

a trial, and even after judgment." Green v. Hooper. 149 Wn. App. 627, 636, 205

P.3d 134 (2009). "'However, amendment under CR 15(b) cannot be allowed if

actual notice of the unpleaded issue is not given, if there is no adequate

opportunity to cure surprise that might result from the change in the pleadings, or

if the issues have not in fact been litigated with the consent of the parties.'"9
Green, 149 Wn. App. at 636 (quoting Harding v. Will. 81 Wn.2d 132, 137, 500

P.2d 91 (1972)). In determining whether the parties impliedly consented to the

trial of an issue, "an appellate court will consider the record as a whole, including

whether the issue was mentioned before the trial and in opening arguments, the

evidence on the issue admitted at the trial, and the legal and factual support for

the trial court's conclusions regarding the issue." Dewey v. Tacoma Sch. Dist.

No. 10, 95 Wn. App. 18, 26, 974 P.2d 847 (1999.)

        Here, neither MRA nor MILP expressly or impliedly consented to try the

issue of the option contract's enforceability. Indeed, throughout the litigation,

both parties asserted that the contract should be enforced—MRA contending that

this pleading, MILP expressly informed MRA that itwould not defend MRA's breach of contract
action on the basis that the option contract was unenforceable. Indeed, MILP itself relied upon
the validity of the contract in bringing its counterclaim against MRA for breach of contract. Where
an issue is not raised in the pleadings, as was the case here, CR 15(b) provides the exclusive
means for determining whether resolution of that issue constitutes the proper basis for a
judgment.
       9Where issues outside the pleadings have in fact been litigated, the mere failure to
amend the pleadings does not affect the result of the trial of these issues. CR 15(b).

                                              -13-
No. 69039-6-1/14



MILP had breached the option agreement "by rejecting [MRA's] attempts to

exercise its option," and MILP asserting that "it [was] MRA who has breached the

option agreement by failing to purchase the property for the required option price

on time, as required by the option agreement." No challenge to the enforceability

of the contract was noted in the various motions of the parties, their trial briefs, or

during opening argument. Although the parties disagreed at trial regarding the

meaning of the term "replacement cost," neither party argued that this

disagreement rendered the contract unenforceable. See 25 David K. DeWolf et

al, Washington Practice: Contract Lawand Practice § 2.8, at 43 (2d ed.

2007) ("Mutual assent does not. . . require both parties to have an actual and
identical understanding of all of the nuances of the bargain."). MILP, MRA, and

the trial court—which entered no conclusion of law regarding the contract's

validity and instead simply enforced it—all treated the question ofthe contract's
enforceability as affirmatively established.

       Indeed, if the issue of the contract's enforceability had been litigated, a

host of additional questions would necessarily have arisen. MRA, for instance,

asserts that it agreed to pay above-market rents to MILP in order to secure a

contractual right to purchase the facility from MILP at a later date. Thus, MRA
contends, the option agreement was a material part of the consideration for the
lease agreement. If true, then a determination that the option agreement was
invalid would raise the issue of whether the lease agreement failed for lack of

consideration. At minimum, it would require the trial court to determine ifthe

rents were in fact above-market, the amount of the overcharge, and the extent to

                                         -14-
No. 69039-6-1/15



which MILP would be required to disgorge past rent payments in order to avoid

unjust enrichment. As noted above, none of these questions emerged during the

trial.

         Nevertheless, although the issue of the option contract's enforceability

made no appearance at any stage of the litigation, MILP asserts that this matter

may be raised for the first time on appeal pursuant to RAP 2.5(a)(2). In general,

we will not review an issue, theory, argument, or claim of error not presented at

the trial court level. Pellinov. Brink's. Inc.. 164 Wn. App. 668, 685 n.8, 267 P.3d

383 (2011). RAP 2.5(a)(2), however, provides a limited exception to the general

rule, permitting a party to claim as error for the first time on appeal the "failure to

establish facts upon which relief can be granted." MILP asserts its claim falls

within this exception.10
         As noted above, the Supreme Court promulgates the procedural rules of

our courts with the intent that such rules will apply harmoniously. See Hedlund.

110Wn. App. at 188-89. At oral argument, MILP's counsel indicated his belief
that the requirements of CR 8(b) and CR 15(b) are meaningless where a party

seeks to raise as error the failure to prove essential facts pursuant to RAP

2.5(a)(2). We disagree, however, that in promulgating RAP 2.5(a)(2), our

Supreme Court intended to render nullities these basic rules of pleading. Indeed,

         10 We note that we have previously refused to review the question of a contract's
enforceability where the issue was raised for the first time on appeal. Neiffer v. Flaming, 17Wn.
App. 443, 446, 563 P.2d 1300 (1977). As MILP does here, in Neiffer, the appellant contended
thatan option provision in a lease did not contain sufficient terms and conditions necessary for
the sale ofthe property and that, accordingly, the option was unenforceable. 17 Wn. App. at 446.
 Because this issue was raised for the first time on appeal, however, we determined that we would
 not consider the appellant's contention. Neiffer. 17 Wn. App. at 446.

                                              -15-
No. 69039-6-1/16



by its own language, RAP 2.5(a)(2) pertains only to issues that must be

established by proof of particular facts at trial. Where no proof of such facts is

required in order to obtain relief, the rule is simply inapplicable. If"relief can be

granted" despite the absence of particular facts, an appellant cannot thereafter

invoke RAP 2.5(a)(2) in order to argue for the first time on appeal that such facts

were not established.

       Here, having indicated in its answer that the option contract's

enforceability was not a contested issue in the case, MILP cannot be heard to

complain on appeal that the facts necessary to demonstrate a valid contract were

not established at trial. Given the pleadings, the various motions of the parties,

and the way the case was actually tried, no proof of "mutual assent" was

necessary for MRA to obtain relief on its breach of contract claim. See Yarnell,

66 F.R.D. at 423. The question of the contract's validity had been definitively

resolved, and no proof of facts demonstrating its enforceability was necessary.

Accordingly, RAP 2.5(a)(2) is inapplicable and, thus, MILP has not demonstrated

an entitlement to appellate review.

                                           B


       Even had MILP denied the validity of the option agreement in its answer,

given the language of the contract, we perceive no error in the trial court's

decision to enforce it. MILP contends that the parties failed to reach mutual

assent with regard to the material term of the facility's price and that, accordingly,

the option agreement was an unenforceable "agreement to agree." In support of

this contention, MILP points to the trial court's finding that there was no "meeting

                                         -16-
No. 69039-6-1/17



of the minds with respect to what was to be included in determining replacement

cost for the facility." However, the option agreement expressly contemplated

circumstances in which replacement cost would not be considered when

determining a purchase price. Indeed, even in the absence of replacement cost,

the contract provided a specific, detailed mechanism for determining the

purchase price of the facility. Given that the parties expressly agreed to these

terms, MILP's contention is without merit.

       In order for a valid contract to form, the parties must objectively manifest

their mutual assent to the essential terms of the contract. Yakima County Fire

Prot. Dist. No. 12 v. City of Yakima, 122 Wn.2d 371, 388, 858 P.2d 245 (1993).

The essential terms of an option contract for a sale of land include the parties, a

description of the property, and a means for determining the purchase price.

Neiffer v. Flaming. 17 Wn. App. 443, 446, 563 P.2d 1300 (1977) (citing Valley

Garage. Inc. v. Nvseth. 4 Wn. App. 316, 481 P.2d 17 (1971)).

       Here, the option agreement stipulated that the facility's purchase price

would be the greater of the facility's "fair market value," "replacement cost," or

"prospective fair market value" set forth in Schedule D. MILP contends that the

plain language of the agreement required that each of these three valuation

methods be considered in determining the final purchase price and that,

accordingly, the trial court's finding that there was "no meeting of the minds" with

respect to the meaning of "replacement cost" equates to a determination that the




                                         17
No. 69039-6-1/18



parties failed to mutually assent to the essential term ofthe facility's price.11
Thus, MILP asserts, the option contract is unenforceable. We disagree.

        Contrary to MILP's assertion, the option agreement did not require that all

three pricing methods be utilized in determining the facility's final purchase price.

Rather, the agreement contemplated that as few as one of the pricing methods

could be sufficient. In order for either "fair market value" or "replacement cost" to

apply, the parties were required to take timely, proactive steps. The agreement

specified that if MILP and MRA were unable to agree upon a "fair market price"

within 15 days of MRA's exercise of its option, then each party would be granted

five additional days to appoint a disinterested appraiser to assess fair market

value. MILP's selection of a disinterested appraiser to assess "replacement cost"

was likewise to occur pursuant to this procedure.12 In the event that no



         11 MILP further contends that the trial court's finding that there was no meeting of the
minds regarding whether to include the value of MRA's business when determining the facility's
fair market value also renders this pricing method unenforceable. However, this finding applied
only to the question of whether the parties had agreed to include one particular factor among
manythat might be included when assessing fair marketvalue. In contrast to the trial court's
evaluation of "replacementcost," the court did not determine that this pricing method could not be
given effect.
        12 The option agreement stipulated that "[replacementcost shall be determined by the
appraiser selected by MILP pursuant to the next succeeding paragraph, and shall be the amount
included in the appraiser's appraisal report on the Facility." The next succeeding paragraph
stipulated:
         MILP and MRA shall within five (5) days and the expiration of the fifteen (15) day
         period each promptly appoint an [sic] disinterested appraiser who is a member of
         the American Institute of Real Estate Appraisers (or any successor organization
         thereto) experienced in the appraisal of facilities like that of the Facility. The
         appraisers appointed, shall, within thirty (30) days after the date of the notice
         appointing the first appraiser, proceed to appraise the Facility to determine the
         Fair Market Value thereof as of the relevant date (giving effect to the impact, if
         any, of inflation from the date of their decision to the relevant date); provided,
         however, that ifonly one (1) appraiser shall have been so appointed, or iftwo (2)
         appraisers shall have been appointed but only one (1) such appraiser shall have
         made such determination within thirty (30) days after the appointment of the first

                                                -18-
No. 69039-6-1/19



disinterested appraiser was selected by either party within the five-day period,

the purchase price would be determined solely by Schedule D, which set forth

the "prospective fair market value" of the facility. Accordingly, MILP is incorrect

that the purchase price of the facility could not be determined in the absence of

an evaluation of replacement cost.

       Moreover, the option agreement expressly contemplated circumstances in

which certain of its provisions might be found unenforceable. A broad

severability clause provided that "[t]he invalidity or unenforceability of any

particular provision ofthis Agreement shall not affect the other provisions hereof,
and this Agreement shall be construed in all respects as if such invalid or

unenforceable provision were omitted." Pursuant to this provision, the contract

remained enforceable even after the pricing method based upon replacement

cost was stricken. Indeed, even if both fair market value and replacement cost

were severed from the agreement, the remaining contract would retain a valid

method for determining the facility's price: namely, Schedule D of the option

agreement.13

        appraiser, then the determination of such appraiser shall be final and binding
        upon the parties.
          Furthermore, in this case, the trial court determined that MILP's appraiser, James
Brown, was not a disinterested appraiser and that, accordingly, all of its opinions must be
disregarded. The court explained thatAaron Brown, the appraiser assigned to evaluate the
facility, had "abandoned his own independence and integrity" by following MILP's directions to
change his final report. The trial court further noted that Brown had repeatedly violated the
standards of professional appraisal practice, changed his assessment of construction quality in
order to increase the facility's valuation, ignored his own inspector's report ofwater damage and
construction defects, and arbitrarily backdated his reportfrom September 24, 2008 to June 15,
2008. Contrary to MILP's assertion at oral argument, these actions by Brown related not only to
the determination of fair market value but also to the determination of replacement cost.
          Accordingly, no disinterested appraiser was timely appointed by MILP to calculate the
facility's fair market value and replacement cost. As the trial court noted, in such circumstances,

                                               -19-
No. 69039-6-1/20



        Under the broad severability provision of the option agreement, the pricing

method based upon replacement cost was properly severed from the contract.

The remaining agreement set forth all the essential terms of a valid option

contract, including a sufficient mechanism for determining the purchase price.

The trial court did not err by enforcing this agreement.

       The remainder of this opinion has no precedential value. Therefore, it will

be filed for public record in accordance with the rules governing unpublished

opinions.

                                                Ill


        MILP next contends that the trial court erred by awarding consequential

damages to MRA where, MILP asserts, the undisputed evidence establishes that

MRA came into equity with unclean hands. We disagree.

        "'[A] decree for specific performance seldom brings about performance

within the time that the contract requires.'" Rekhi v. Olason. 28 Wn. App. 751,

757-58, 626 P.2d 513 (1981) (alteration in original) (quoting Restatement

(Second) of Contracts § 365 cmt. d (1979)). Thus, when ordering specific

performance, a court may also award consequential damages in order to make

the nonbreaching party whole. Cornish Coll. of the Arts v. 1000 Virginia. Ltd.

P'ship. 158 Wn. App. 203, 228, 242 P.3d 1 (2010). Such damages are not

awarded for breach of the contract but, rather, "at the equitable discretion of the

trial court." Cornish. 158 Wn. App. at 228.

itwould be appropriate to rely solely upon Schedule D in setting the purchase pricefor the facility.
Thus, based upon the facts of the case as well, the trial court properly determined that
replacement cost was not a valid measure upon which to base the facility's valuation.

                                               -20-
No. 69039-6-1/21



       MILP is correct that "[ejquity jurisprudence requires the party seeking

equitable relief to have acted in good faith and to come into equity with clean

hands." Cornish. 158 Wn. App. at 216. In this case, however, the trial court

expressly found that MRA performed all of its obligations under the option

agreement in good faith. A trial court's findings of fact are reviewed for

substantial evidence. In re Marriage of Chua. 149 Wn. App. 147, 154, 202 P.3d

367 (2009). Substantial evidence is the quantum of evidence sufficient to

persuade a rational, fair-minded person that the premise is true. Sunnvside

Valley Irrigation Dist. v. Dickie. 149 Wn.2d 873, 879, 73 P.3d 369 (2003).

       Here, MILP claims that the trial court's finding that MRA acted in good

faith was incorrect for two reasons. First, MILP contends that MRA acted in bad

faith by asserting the right to exercise its option on a date that was later

determined by the trial court to be premature. However, MRA's position on this

issue hardly evidences bad faith. The language of the option agreement

specified that the option period would commence on the eighth anniversary of

"the commencement date of the Facility Lease Agreement."14 MRA reasonably
interpreted this language to indicate that its right to purchase the facility arose

eight years after the lease agreement was signed. This claim was not found to

be frivolous. The fact that a court ultimately concluded that the option period did

not commence until eight years after a certificate of occupancy was issued in no

way indicates that MRA's claim was brought in bad faith.

         14 The lease agreement specified that the "term of this lease" would commence upon the
earlier of (1) "the issuance of a certificate of occupancy" or (2) MRA taking possession of the
property. The lease agreement itself, however, was signed on October 21, 1999.

                                            -21 -
No. 69039-6-1/22



        Second, MILP contends that MRA's bad faith was evidenced when, at

trial, MRA's appraisers utilized a definition of "replacement cost" that excluded

the value of the underlying land, a definition that, MILP asserts, MRA knew had

been rejected during negotiations. However, there is scant evidence in the

record that MRA "knew" that MILP's definition of replacement cost excluded the

value of land. The lease agreement contained a definition of "full replacement

cost" that did not include any reference to the underlying land. Indeed, the lone

source of such a proposition was the testimony of MILP's owner and attorney,

Keith Therrien, whom the trial court, as the sole judge of credibility, was entitled

to either believe or disbelieve. In determining that MRA acted in good faith, the

trial court implicitly rejected Therrien's version of events.15
        The record does not support MILP's assertion that MRA came into equity

with unclean hands. The trial court did not err by determining that MRA was

entitled to equitable relief in the form of consequential damages.




         15 MILP asserts that negotiations regarding the language of the option agreement also
demonstrate that MRA knew that any definition of "replacementcost" must include the value of
the underlying land. MILP contends that MRA's own attorney initially proposed a definition of
replacement cost that excluded the underlying land and that MILP specifically rejected this
definition. However, it is far from clear that MRA proposed such a definition or that this definition
was rejected because itexcluded the value of the underlying land. The proposed language to
which MRA points specifically references "Alzheimer's facilities," which MRA had no plans to
include at the facility. The only party that did maintain facilities with Alzheimer's residents was
Campbell Homes, the general partner of MILP. Thus, the evidence suggests that itwas
Campbell Homes which was the source ofthis language. Moreover, the reference to Alzheimer's
residents rendered this definition of replacement cost inappropriate for the parties' option
contract. Accordingly, it is unclear whether the rejection of this contractual language occurred
because it excluded the value of the underlying land or because it referenced subjects not
contemplated by the parties' agreement.

                                                -22-
No. 69039-6-1/23



                                        IV


      MILP next contends that the trial court abused its discretion in determining

the amount of consequential damages to which MRA was entitled. It asserts that

it was error for the court to award, as consequential damages to MRA, MRA's

lease payments from June 18, 2008 (the date upon which the court determined

that MRA had exercised its option) to July 18, 2012 (the date upon which the

court determined the purchase and sale agreement should be executed). The

trial court found that MRA's lease payments to MILP would have "gone toward

reducing [MRA's] underlying mortgage had [it's] attempts to purchase the facility

not been frustrated by [MILP]" and that, accordingly, all lease payments during

this period should be deducted from the facility's purchase price. On appeal,

MILP asserts several challenges to the amount of this award. None have merit.

      "[T]rial courts have broad discretionary power to fashion equitable

remedies." SAC Downtown. Ltd. P'Ship v. Kahn. 123 Wn.2d 197, 204, 867 P.2d

605 (1994). The fashioning of such a remedy is reviewed for abuse of discretion.

Niemann v. Vaughn Cmtv. Church. 154 Wn.2d 365, 374, 113 P.3d 463 (2005).

Accordingly, an award of consequential damages will not be disturbed absent a

showing that the trial court's decision was "'manifestly unreasonable or exercised

on untenable grounds.'" Cornish, 158 Wn. App. at 228-29 (quoting Paris v.

Allbaugh. 41 Wn. App. 717, 720, 704 P.2d 660 (1985).

       MILP first contends that MRA was entitled to no consequential damages

for the period of June 18, 2008 to November 30, 2010. This is so, MILP

contends, because until the latter date, MRA continued to assert that it had

                                      -23-
No. 69039-6-1/24



properly exercised its option in 2007, a year in which the value of the facility was

substantially lower. Until that dispute was resolved, MILP asserts, it would have

been impossible to reach agreement on a purchase price and, thus, equally

impossible for MILP to perform under the contract. Because consequential

damages "must run from the date at which the contract required performance,"

Cornish. 158 Wn. App. at 229, MILP contends that no such damages should

have been awarded for the period prior to November 30, 2010.

       However, contrary to MILP's assertion, the record does not indicate that

MRA was insisting upon a 2007 purchase price until November 2010. Indeed, in

June 2009, MRA offered to purchase the facility for $19 million, a higher price

than that set forth by Schedule Dfor the 2007 calendar year. Moreover, the trial

court expressly determined that, although the parties remained at an impasse

regarding the commencement ofthe option period, nothing precluded MILP from
negotiating a purchase price or setting a closing date until that dispute was
resolved. MILP assigns no error to these findings. Accordingly, MILP's assertion

that performance was impossible prior to November 30, 2010 is without merit.

       Similarly, MILP's contention that performance of the contract was

prevented by MRA's "unproductive" investigation of Campbell Homes'

relationship to James Brown is also unsupported by the record. There is no

indication that MRA's discovery regarding this issue was unproductive. The trial

court expressly determined that MRA's discovery efforts "contributed greatly to

[its] determination to disregard the testimony of [MILP's appraiser]" at trial. The
court explained that many of the same persons and entities comprising MILP had

                                        -24-
No. 69039-6-1/25



longstanding involvement with Campbell Homes. Therrien, for instance, had for

years served as Campbell Homes' attorney, during which time he had many

dealings with James Brown appraisers. As the trial court found, evidence of such

previous relationships was crucial to its determination that Aaron Brown's

opinions had been improperly manipulated by MILP. This finding is supported by

substantial evidence and, accordingly, MILP's contention provides no basis for

overturning the award of consequential damages.

      MILP next contends that it was error for the trial court to award the entire

amount of MRA's rental payments to MILP as consequential damages to MRA.

MILP asserts that if MRA had exercised its option in June 2008, then MRA would

have been required to make substantial loan payments in order to finance its

purchase. Accordingly, because the purpose of consequential damages is to
place the nonbreaching party in the position that he or she would have been had
the contract been performed, MILP contends that MRA is entitled to no more

than the difference between its actual rental payments and the hypothetical costs

of owning the property.

       However, MILP does not dispute that MRA made over $6 million in rental

payments to MILP after the date upon which the contract required MILP to sell
the facility to MRA. MILP does not contend that it was somehow entitled to such
rental payments. Thus, in order to place MRA in the position that it would have
been had the contract been performed, itwas necessary for MILP to disgorge

these rental payments to MRA. See Cornish, 158 Wn. App. at 215 (affirming



                                        25-
No. 69039-6-1/26



award of rental payments as consequential damages). Such payments

constituted, in effect, a down payment on the purchase price.

      Moreover, had the sale of the facility occurred in June 2008 (as the

contract required), MRA would thereafter have made substantial progress toward

paying down any loan procured in order to purchase the property. MRA would

have satisfied over four years of such obligations during the period that MILP

delayed performance. Thus, for this reason as well, in order to place MRA in the

position that it would have been had the exercise of the option been honored, a

reduction in the purchase price was required.

       Nevertheless, MILP contends that a seller who breaches a contract to sell

real property is entitled to interest payments on the purchase price during the

period of delayed performance. MILP notes that in similar circumstances, this
court has held that a seller may be entitled to receive the value of his or her lost

use of the purchase money during the period performance is delayed. Paris. 41
Wn. App. at 720. There is, however, no indication in the record that MILP ever
requested such an accounting between the parties. MILP cites to no portion of
the record in which it argued, as it does now on appeal, that the proposed award

was inequitable.

       Moreover, if MRA's consequential damages were to be reduced in such a

manner, the award would "fall short of making whole the nonbreaching party,

which is the purpose for which consequential damages are awarded." Cornish.

158 Wn. App. at 229-30 n.15. As noted above, MRA made over $6 million in
lease payments to MILP after the date upon which it exercised its option.

                                        -26-
No. 69039-6-1/27



Particularly given the trial court's determination that MILP acted in bad faith by

deliberately attempting to prevent MRA from purchasing the facility, a reduction

in MRA's award to cover MILP's losses would not be equitable.16 The trial court
did not err by awarding the full amount of MRA's rental payments to MILP as

consequential damages.

                                                V


        MILP next asserts that MRA's motion to amend the trial court's preliminary

findings of fact and conclusions of law was untimely. It asserts that the filing of

this instrument constituted an "entry of judgment" and that, accordingly, CR 52(b)

required that MRA file its motion to amend within ten days of this document's

issuance. We disagree.

        Following a bench trial, a trial court is required to "find the facts specially

and state separately its conclusions of law." CR 52(a)(1). A party may bring a

motion asking the court to amend its findings or make additional findings "not

later than 10 days after entry ofjudgment" CR 52(b) (emphasis added). CR

54(a)(1) defines a "judgment" as "the final determination of the rights of the


        16 MILP contends that the trial court erred by determining that MILP breached the implied
covenant of good faith and fair dealing underthe option contract. However, thisfinding is
supported by substantial evidence. In evaluating MILP's intentions, the trial court explained:
        [T]he refusal of [MILP] after that date to discuss pricing or a closing date, the
        repeated effort to lure [MRA] into meetings in which the only discussion was a
        refinance of the facility to allow them to acquire a minority interest, the lack of
        candor or recollection by Mr. Dye with regard to his efforts to stall and subvert
        their exercise of rights under the Option, and the concerted effort of [MILP] to
        inflate the purchase price through submission of the belated and altered
        appraisal of Aaron Brown, cumulatively can only be found by the court to have
       been a deliberate effort to prevent [MRA] from purchasing the facility.
The court's characterizations of MRA's conduct are amply supported in the record, and MILP
does not and could not argue that such actions do not constitute bad faith. The trial court did not
err by determining that MILP breached the implied covenant ofgood faith and fair dealing.

                                               -27-
No. 69039-6-1/28



parties in the action and includes any decree and order from which an appeal

lies." Judgments may be presented at the same time as the findings of fact and

conclusions of law. CR 54(f)(1). However, "[n]o order or judgment shall be

signed or entered until opposing counsel have been given 5 days' notice of

presentation and served with a copy of the proposed order or judgment." CR

54(f)(2).

       In determining whether a judgment has been entered, "substance controls

over form." Nestegard v. Inv. Exch. Corp.. 5 Wn. App. 618, 623, 489 P.2d 1142

(1971). MILP is correct that a reviewing court must look to an instrument's

content and not to its title when evaluating the nature of the instrument.

Nestegard. 5 Wn. App. at 623. Thus, in Nestegard. we explained that where an

"order" purports to finally determine the rights of the party, stating that "Judgment

be and it is hereby entered for the plaintiff and against the defendant," such an

order is properly deemed a judgment, notwithstanding its title. 5 Wn. App. at

621.

        Here, MILP asserts that the filing of Judge Bowden's findings of fact and

conclusions of law constituted the entry of a "judgment" and that, accordingly,

MRA's failure to move to amend these findings and conclusions within the ten-

day time limit rendered the motion untimely. However, both the contents of this
instrument and the circumstances of its filing belie this contention.

        Following trial, Judge Bowden sent a letter to the parties enclosing copies

of a document entitled "Findings of Fact and Conclusions of Law." Judge

Bowden explained that rather than issuing a letter decision, he had drafted his

                                        -28-
No. 69039-6-1/29



own findings in order to save the parties further disagreement and ongoing

attorney fees. However, he noted, "[i]f either of you feel that specific additional

findings or conclusions should be provided, I remain willing to entertain additional

such requests." The parties were not served with notice that a judgment had

been entered as is required by CR 54(f)(2). Nor did the findings and conclusions

contain any operational language requiring the parties to take action. Instead,

Judge Bowden simply signed and dated this document.

       This instrument contained none of the hallmarks of a judgment. Indeed,

its title accurately reflected its contents: the findings of fact and conclusions of

law of the trial court. The instrument neither purported to finally determine the

rights of the parties nor indicated that judgment had been entered. Judge

Bowden himself specifically stated that he did not intend his findings and

conclusions to be a "judgment." Because the filing of this instrument did not

constitute an "entry of judgment," the ten-day time limitation set forth by CR 52(b)

was inapplicable to MRA's motion. The trial court did not err by determining that

the motion to amend was timely.

                                          VI


       MILP next contends that the trial court erred by determining that Campbell

Homes was jointly and severally liable for MILP's breach of the option

agreement. This is so, MILP asserts, because Campbell Homes was no longer

the general partner of MILP on the date that MRA exercised its right under the

option agreement to purchase the facility. We disagree.



                                          29
No. 69039-6-1/30



       A general partner is "liable jointly and severally for all obligations of the

partnership unless otherwise agreed by the claimant or provided by law."17 RCW
25.05.125(1). "A partner's dissociation does not of itselfdischarge the partner's

liability for a partnership obligation incurred before dissociation." RCW

25.05.260(1). "One partner may not relieve himself of liability for past debts of

the partnership merely by terminating the partnership." Hewitt Rubber Co. v.

Thompson. 127 Wash. 363, 368, 220 P. 767 (1923). Rather, in order to avoid

continued personal liability upon withdrawing from the partnership, the

dissociated partner must generally obtain the agreement of both partnership

creditors and the partners who will continue the business.18 RCW 25.05.260(3).
        An option contract is a "complete, valid and binding agreement by the
terms of which a collateral offer is kept open for a specified period of time."

Bennett Veneer Factors. Inc. v. Brewer. 73 Wn.2d 849, 853, 441 P.2d 128

(1968). The grantor ofan option is "under a duty not to 'repudiate or make
performance impossible or more difficult.'" Thompson v. Thompson. 1 Wn. App.
196, 200, 460 P.2d 679 (1969) (quoting McFerran v. Heroux, 44 Wn.2d 631, 638,
269 P.2d 815 (1954)). Importantly, "[a]n option contract is binding upon the
offeror and actually becomes a contract before the option holder decides whether
or not to exercise the power." 25 David K. DeWolf et al, supra. § 2.16, at 53

         17 MILP was a limited partnership. In such a partnership, only the general partner is
individually liable for the partnership's obligations. See, e.g., Dwinell's Cent. Neon v.
Cosmopolitan Chinook Hotel, 21 Wn. App. 929, 934, 587 P.2d 191 (1978).
        18 Alternatively, "[a] dissociated partner is released from liability for a partnership
obligation if a partnership creditor, with notice of the partner's dissociation but without the
partner's consent, agrees to a material alteration in the nature or time of payment of a partnership
obligation." RCW 23.05.260(4). MILP does not contend that anything of this nature occurred in
this case.


                                                -30-
No. 69039-6-1/31



(emphasis added) (citing Turner v. Gunderson. 60 Wn. App. 696, 807 P.2d 370

(1991)).

         Here, MRA and MILP entered into the option agreement on October 21,

1999. On that date, Campbell Homes, as general partner, became obligated to

sell the property upon MRA's exercise of its option. Under RCW 25.05.260(1),

Campbell Homes remained jointly and severally liable for all obligations under

the option agreement, even for breaches that occurred after it withdrew from the

partnership on May 1, 2008. MILP's assertion to the contrary is without merit.19
The trial court did not err by determining that Campbell Homes was jointly and

severally liable for MILP's breach of the terms of the option contract.

                                              VII


         MILP's final contention is that the trial court erred by awarding MRA its

attorney fees for discovery related to determining the relationship between

Campbell Homes and James Brown appraisers. It asserts that, because MRA

uncovered no evidence that Campbell Homes had undue influence over James

Brown, this discovery was unproductive. MILP is correct that an award of

attorney fees may be reduced for time spent on unsuccessful claims or theories.
Bowers v. Transamerica Title Ins. Co.. 100 Wn.2d 581, 597, 675 P.2d 193

(1983). Here, however, the trial court expressly found that MRA's discovery

efforts contributed greatly to its decision to disregard the testimony of Aaron

         19 Although MILP is correctthat a new purchase and sale agreement is formed upon the
exercise of the option, this is irrelevant to the issue at hand. Here, itwas the offer itself,
contained in the option agreement, that MILP failed to honor. Accordingly, it is MILP's breach of
the option agreement—and not of a secondary purchase and sale agreement—that gives rises to
the liability in this case.

                                             -31 -
No. 69039-6-1/32



Brown. As discussed above, this finding is supported by substantial evidence.

The trial court did not err by awarding attorney fees to MRA for time spent

investigating the relationship between Campbell Homes and James Brown.

                                        VIM


       Both parties request attorney fees and costs on appeal. A contract that

provides for attorney fees at trial also supports such an award on appeal. Atlas

Supply. Inc. v. Realm. Inc.. 170 Wn. App. 234, 241, 287 P.3d 606 (2012). Here,

the option agreement stipulates that "[i]n the event of any action arising

hereunder, the prevailing party shall be granted its attorneys fees and court

costs." MRA has prevailed both at trial and on appeal. Accordingly, MRA is

entitled to an award of reasonable attorney fees. Upon proper application, a

commissioner of this court will enter an order awarding to MRA its fees and costs

on appeal.

       Affirmed.




                                           ^       «^~~~y/i/L
We concur:




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                                         32
