KEY DEVELOPMENT INVESTMENT, LLC, and Trinity Glass International, Inc., Respondents/Cross–Appellants, v. PORT OF TACOMA, Appellants/Cross–Respondents.
-- January 23, 2013
Dennis J. La Porte, Krilich La Porte West & Lockner, Tacoma, WA, for Petitioner.Hall Baetz, Attorney at Law, Roger Ashley Leishman, Davis Wright Tremaine LLP, Seattle, WA, for Respondent/Cross–Appellant.
¶ 1 We granted interlocutory review to address the following certified issue from the trial court: Application of the independent duty doctrine (formerly, the economic loss rule) to tort claims arising from the Port of Tacoma's negotiations to purchase real property from Key Development Investment, LLC (Key). The trial court (1) granted the Port's summary judgment dismissal of Key's tort claims for fraudulent and negligent misrepresentation and tortious interference with business opportunities; and (2) denied the Port's motion for summary judgment dismissal of Trinity Glass International, Inc.'s (Trinity) related tort claims. The Port also asks us to “strike” references to the “Plaintiffs' Statement of Uncontested Facts—Corrected” from Key and Trinity's responding briefs.1
¶ 2 Key and Trinity argue that, independent of the real estate purchase and sale letter of intent between Key and the Port, the Port owed them a duty to be honest in its representations and dealings about the Port's need and plan to relocate its tenant from the Port's soon-to-be-condemned property onto Key's property. The Port argues that (1) the trial court should have granted summary judgment dismissal of Trinity's tort claims because Trinity was a third-party beneficiary of the Port's contract with Key; (2) the Port owed no duty to Trinity independent of this contract; and (3) the trial court's grant of summary judgment to the Port based on the economic loss rule's barring Key's tort claims should have also included summary judgment similarly barring Trinity's tort claims.
¶ 3 The trial court understandably “misinterpreted” the economic loss rule because, when it rendered its decision in 2010, our Supreme Court had not yet issued its Jackowski2 opinion clarifying the economic loss rule and transforming it into the “independent duty doctrine.”3 Applying Jackowski here, we (1) reverse the trial court's summary judgment dismissal of Key's tort claims against the Port; (2) affirm the trial court's reinstatement of Trinity's tort claims against the Port on reconsideration and its corresponding denial of summary judgment dismissal of these claims; and (3) remand to the trial court to consider (a) under Jackowski's independent duty doctrine, whether the Port owed Key a duty independent of the LOI to sustain its tort claims, (b) whether the Port owed Trinity a duty in tort, and (c) if so, whether a genuine issue of material fact exists for Key's or Trinity's tort claims to survive summary judgment for the Port and to warrant a trial on such tort claims. We deny the Port's request to strike “Plaintiffs' Statement of Uncontested Facts—Corrected.”4
I. Negotiations and Letter of Intent for Port's Purchase of Key's Property
¶ 4 At the time of the negotiations at issue here, Key Development Investment, LLC and Trinity Glass International., Inc., were “affiliates, sharing [some] common ownership”5 and management: Ki and Jong Ham owned Trinity; Ki and Jong Ham, Tim Bang, and Chang Choi owned Key. Alexander C. Lee was vice president and chief financial officer of Trinity; and Chong So was Trinity's in-house counsel. Both Lee and So, however, helped manage Key and acted on Key's behalf in dealings with the Port.
¶ 5 Key owned property in the Frederickson Industrial Area of Pierce County. In 2007, Trinity was Key's tenant on this property, although Trinity did not use the entire site. Trinity wanted Key to sell or to lease it the property to eliminate or to reduce Trinity's rent payments to Key. On April 24, 2007, attempting to alleviate Trinity's rent obligations, Key entered into a listing agreement with Colliers International to lease a portion of the property to another prospective tenant.
A. Port's Plans To Obtain Superlon and Key Properties
¶ 6 In mid–2007, the Port was planning the “East Blair Project”6 —an $850 million redevelopment of the “Blair Peninsula container terminal” to accommodate a major new tenant. Clerk's Papers (CP) at 1691. In August, the Port initiated condemnation proceedings against nearby property owned by Superlon Plastics Company, Inc., identifying the Superlon property as “necessary” and “critical” for the Port's redevelopment project. CP at 1148–49. The Port later entered into direct negotiations with Superlon to acquire this property for the East Blair Project's road and rail infrastructure.
¶ 7 Despite its plan to condemn the Superlon property for the East Blair Project, the Port wanted to retain Superlon's jobs in the Tacoma area; so it sought another location near the Port where it could relocate Superlon. As a result, in September, Robert Hacker, a commercial real estate broker with CB Richard Ellis, “approached Key about the possibility of selling [its property] to the Port”7 and obtained permission from Key to approach the Port about buying the Key property for Superlon's relocation.
¶ 8 According to Trinity and Key's in-house counsel, So, the Port represented to Key, Trinity, and the real estate brokers that (1) the Port's condemnation of the Superlon property for the East Blair Project was a certainty, (2) Superlon must be relocated, and (3) Key's property was the only available property that could accommodate Superlon's physical needs and the Port's timing requirements. Jack Hedge, the Port's property manager responsible for acquiring property for Superlon's relocation, did not deny having told Key and Trinity that acquiring Key's property was a “certainty”; and he acknowledged that “in conversation ․ about the ․ various sites ․, that would have been a point [discussed].” CP at 1233 (emphasis added).
¶ 9 Nevertheless, by November, Port real estate director Bob Emerson told an East Blair Project road and utilities manager that he “wanted a design for keeping road and rail and utilities off Superlon.”8 But the Port did not tell Key that it might try to avoid acquiring the Superlon property for the East Blair Project infrastructure or that it might not need the Key property for Superlon's relocation.
¶ 10 Around this time, Key received an independent November 27, 2007 letter of intent from Harvey Widman and Assigns, wanting to purchase the Key property for $32.8 million.9 With Key's authorization, CB Richard Ellis brokers disclosed to the Port Widman's offer to purchase Key's property and represented to the Port that Key would sell its property to the Port for $35 million. The next month, December, the Port's representatives told So (acting for Key) that the Port would be willing to pay $35 million for Key's property. Hedge, from the Port, and a Superlon owner inspected Key's property. On December 19, CB Richard Ellis senior associate John Bauder emailed So (Key's in-house counsel) that (1) Jay Stewart (the Port's real estate manager) had said the Port was “very, very interested” in purchasing Key's property; and (2) although interested, the Port “just can't seem to get out of their own way.” CP at 1688.
¶ 11 Meanwhile, the Port had adjusted the estimated cost of acquiring the Superlon property from $3.3 million to $7.5 million. And estimates of the environmental cleanup costs associated with preparing the Superlon property for the East Blair Project infrastructure had increased from $50,000 to $1,500,000. If the Port was reconsidering its decision to pursue the Superlon property and, consequently, its need to purchase Key's property for Superlon's relocation, the Port did not disclose its misgivings to Key. Instead, the next month, on January 9, 2008, Port real estate manager Stewart sent Key's broker, Bauder, the first draft of what would later become the Port's letter of Intent to Purchase and Right of Entry (LOI).
¶ 12 During a January 14, 2008 meeting, however, Key's part-owner Ki Ham told Port real estate director Emerson that Key's property was not for sale; Emerson responded, “Good, because we don't want to have to buy it.” CP at 264 (emphasis added). But Ki Ham also told Emerson that Key would be willing to sell the property to the Port for around $35 million. According to Trinity and Key's in-house counsel, So, at this meeting, the Port (through Emerson) reiterated its representations about the Port's need for Key's property.
¶ 13 By this time, the Port's design team had developed a “suite of many concepts” for the East Blair Project that bypassed the Superlon property; if adopted, these concepts would eliminate the Port's need to buy the Key property for Superlon's relocation. CP at 1522. By mid-February, the Port had developed plans that avoided the Superlon site altogether. Again, the Port did not inform Key about this potential change of plans, negating its need to buy Key's property.
¶ 14 Instead, between January 9 and March 19, Key and the Port exchanged several different iterations of what would eventually become the LOI, which by March 24, 2008, both parties had signed. The LOI listed a purchase price of $35 million for the Key property. The LOI terms (1) required the Port to pay Key a nonrefundable $10,000 deposit, (2) gave Key and the Port 30 days to “reach a mutually acceptable Purchase and Sale Agreement,”10 (3) gave the Port 90 days to “satisfy itself, in [its] sole discretion regarding the legal and physical condition of the subject Property,”11 and (4) contained a statement that the Port “acknowledges that lease negotiations are currently pending for certain portions of [Key's] Property under a listing agreement made between the Seller and Collier's International.” CP at 93. This March 24, 2008 LOI12 and an earlier September 2007 confidentiality agreement were the only written agreements between the Port and Key; neither written agreement involved Trinity.13
B. Key's Forbearance from Leasing Property Pending Sale to Port
¶ 15 Meanwhile, on March 15, 2008, Collier's International had presented Key with a proposal from MetalTech to lease approximately 45,742 square feet of Key's property for 62 months. Although initially interested, MetalTech eventually lost interest in leasing Key's property. On April 3, Colliers International presented Key with a second proposal—for mkConstructs to lease 83,041 square feet of Key's property for 38 months. According to in-house counsel So, Key did not enter into a lease with either mkConstructs or MetalTech, in part, because the Port had demanded that any lease of Key's property be short term.14
C. Port's Continued Negotiation To Purchase Key's Property
¶ 16 On April 15, Key's broker, Bauder, sent an email to Stewart, Emerson, and Port counsel Ralph Klose stating that Key wished to “stick” to the previously agreed 30–day schedule for entering into a purchase and sale agreement. CP at 893. Bauder's email to the Port also contained the following message:
If the real issue is that the Port does not want to enter into a [purchase and sale agreement] until you feel more comfortable with the transaction, then we should let the owner know that. Based on updates and requests that the Port has given us over the last 3 weeks, the seller has taken steps to accommodate the Port as far as not putting new tenants into the property and getting ready to possibly move out of the main building sooner than what was originally proposed ․
If the Port does want to proceed to a signed [purchase and sale agreement], but everyone is just to[o] busy to draft a document or at least send a blank document, then we will do whatever we can to help. I have offered this before several times and was told to hold off․ Let us know today what you think and we will go from there.
CP at 893 (emphasis added).
¶ 17 That same day, Klose sent Bauder a reply stating simply, “Attached is a more recent Port form; please work from this one”; he attached the Port's standard blank purchase and sale agreement, but his email contained no further instruction or explanation. CP at 867. After receiving these terse comments from the Port, Bauder sent a draft purchase and sale agreement to Key on April 16. Key (1) determined that the draft was “not transaction-specific, and was fundamentally contrary to the express and narrow contingency provisions of the [LOI]”; and (2) concluded that the Port had not put forth its “boilerplate form” draft purchase and sale agreement in good faith. CP at 160.
¶ 18 Key's in-house counsel So asked Bauder “to go back and find out the real reason for the Port's delay and the Port's failure to produce a [purchase and sale agreement] in accordance with the [LOI].” CP at 160. On the evening of April 23 (the 30th and last day to reach a purchase and sale agreement under the LOI), Bauder sent Stewart an email confirming the details discussed earlier in the day and stating that Key would “be willing to sign a mutually acceptable [purchase and sale agreement] once contingencies have been removed.” CP at 130. Stewart responded the next day, stating that (1) removing contingencies was “a significant change of agreed terms and a significant obstacle,” and (2) the Port was waiting for “the remaining diligence information on the property and leases which [Key] agreed to provide the Port last month [in the LOI].” CP at 130. According to Bauder, he complied with the terms of the LOI by sending materials when requested; but the Port never requested any materials until Bauder put pressure on them for a purchase and sale agreement.15
D. Termination of the Port and Key's LOI
¶ 19 On April 24, 2008, the LOI terminated on its own terms. Key and the Port met a few days later, “on or about” April 29. CP at 160. Emerson, the main speaker for the Port, assured Key that the Port's purchase of Key's property would be completed. For the first time, however, Emerson noted that the Port needed to bring in another tenant or “user” to share Key's property with Superlon to make the project look better when presenting it to the Port Commissioners; thus, Key's in-house counsel So first learned that the Port's acquisition of the Key property was contingent on finding other “user[s]” for the Key property.16 CP at 160–61.
¶ 20 Into May, the Port continued to represent to Bauder that the Port needed Key's property for Superlon's relocation. On May 8, a Port representative sent an internal email to other Port employees explaining that the Port had decided to stop pursuing acquisition of the Superlon property; the Port, however, did not provide this new information to Key. On May 21, the Tacoma News Tribune ran a story quoting Emerson as saying that there was a “chance” the Superlon property “might not be needed” for the East Blair Project. CP at 161. In response, So asked Bauder to contact Stewart to check on the Tribune story's accuracy. Stewart responded to Bauder that the Tribune report was not accurate and that the Port still intended to relocate Superlon to Key's property. Later, however, Emerson told Bauder that the Port had withheld from Key and Trinity information that the Superlon property might not be needed because Emerson was concerned that Key might be selling the property17 to another buyer.
¶ 21 Ultimately, the Port and Key did not enter into a purchase and sale agreement. The Port did not buy Key's property. Key was not able to sell the property to its other potential purchaser. And Trinity remained on the property as Key's lessee.
A. Trial Court
¶ 22 Key and Trinity sued the Port, alleging various contract and tort claims and alternative legal theories, including economic tort claims for tortious interference with business expectancies, fraudulent misrepresentation, and negligent misrepresentation. The Port moved for summary judgment dismissal of Key's and Trinity's tort claims as barred by the economic loss rule and, alternatively, for lack of a genuine issue of material fact.18 On May 28, 2010, the trial court granted the Port's motion, initially dismissing both “[p]laintiffs' tort claims as a matter of law because the economic loss rule limits [p]laintiffs to their contract remedies.” CP at 1044. The trial court reasoned that (1) “[t]he economic loss rule serves to limit parties to their contract remedies when a loss potentially implicates both tort and contract relief”;19 (2) the parties had a contract in the form of the LOI; (3) the loss involved was purely an “economic one, as distinguished from personal injury or injury to other property”;20 and (4) because the loss did not relate to personal injury or other property, no exception to the economic loss rule applied and the parties were limited to their contractual remedies.21
¶ 23 Trinity moved for partial reconsideration, asserting that the economic loss rule did not bar its claim because it was not party to a contract with the Port. The Port countered that because Trinity was a third-party beneficiary of the Port's contract with Key, the economic loss rule also barred Trinity's tort claims against the Port. The trial court ruled that (1) the Port had not timely raised the “idea that the third-party beneficiary somehow applies in this case”; and (2) even if the Port had timely raised the third-party beneficiary concept, the trial court's ruling would not change because Trinity did not “have an opportunity to allocate risk so the economic loss rule could not apply.” Verbatim Report of Proceedings (VRP) (June 18, 2010) at 13. On June 18, 2010, the trial court granted Trinity's motion for partial reconsideration and ordered, “Trinity's tort claims shall not be dismissed under the economic loss rule.”22 CP at 1088.
B. Interlocutory Discretionary Review
¶ 24 The trial court certified for our review the issue of whether the economic loss rule barred Key's and Trinity's tort claims against the Port. The Port petitioned for interlocutory discretionary review of the trial court's June 18, 2010 order reinstating Trinity's tort claims. Key and Trinity jointly cross-petitioned for review of the economic loss rule issues related to the trial court's May 28, 2010 summary judgment dismissal of Key's tort claims against the Port and its June 18, 2010 order reinstating Trinity's tort claims against the Port. Our court commissioner granted discretionary review of the trial court's summary judgment rulings on these tort claims; the trial court then stayed the contract claims pending below. On June 27, 2012, we ordered supplemental briefing, asking the parties to address newly issued Supreme Court decisions discussing the independent duty doctrine.
¶ 25 At the outset, we note that the parties disagree about whether the Eastwood23 and Affiliated24 decisions replaced the former economic loss rule with a “new” independent duty doctrine or whether those decisions simply renamed the former economic loss rule. In our view, the Supreme Court's newly articulated independent duty doctrine in Jackowski presents a significant shift in the analysis we must undertake in reviewing whether the trial court here properly applied the former economic loss rule and whether we must remand for the trial court to reconsider the facts and its ruling within this new independent duty doctrine framework.25 Based on Jackowski's holding that the independent duty doctrine more accurately captures the principle behind the former economic loss rule, we hold that, under Eastwood, Affiliated, and Jackowski, the independent duty doctrine does not bar Key or Trinity from asserting their respective tort claims against the Port.
I. Former Economic Loss Rule; Current Independent Duty Doctrine
¶ 26 The Port argues that (1) Eastwood and Affiliated “renamed the economic loss rule,”26 leaving the Supreme Court's earlier decisions under the former economic loss rule intact; (2) Trinity was a third party beneficiary of the Port's contract with Key, thus making “any remedies [Trinity] possessed ․ contractual”27 and resulting in the Port's owing no tort duty to Trinity; and (3) “[n]o Washington court has ever found that a potential buyer of real property owes the seller any duty regarding representations about the potential buyer's intention to purchase the property.” Reply Br. of Appellant at 44. Disagreeing with the Port's characterization of the independent duty doctrine, Key and Trinity argue that (1) the independent duty doctrine replaces the former economic loss rule; (2) the independent duty doctrine does not bar tort claims merely because “a case involves economic harms or contractual relationships”28 (3) instead, “each of [their] three common law claims has long been recognized in Washington”29 by our Supreme Court; and (4) these common law tort claims provide remedies for plaintiffs suffering “purely financial losses” independent of contractual relationships. Br. of Resp'ts at 20.
A. Evolution of Economic Loss Rule
¶ 27 We first address the relevant Supreme Court cases in chronological order, ending with its most recent Jackowski decision.30
1. Former economic loss rule: Alejandre (2007)
¶ 28 Before it decided Eastwood and Affiliated, our Supreme Court had described the former economic loss rule in Alejandre v. Bull as “appl[ying] to hold parties to their contract remedies when a loss potentially implicates both tort and contract relief.”31 The Court held that the economic loss rule barred a real property buyer's negligent misrepresentation claim against the seller for failure to disclose a defective septic system because the system was “within the scope of the parties' contract.” Alejandre, 159 Wash.2d at 677, 153 P.3d 864.32
2. New independent duty rule: Eastwood, Affiliated, Elcon, Jackowski
¶ 29 On November 4, 2010, our Supreme Court decided Eastwood and Affiliated. Although the Court rendered split decisions in both cases, together, they established the “new” independent duty doctrine, which our Supreme Court later refined in Elcon33 and Jackowski.34 Jackowski, 174 Wash.2d at 730–31, 278 P.3d 1100; Elcon, 174 Wash.2d at 165, 273 P.3d 965; Affiliated, 170 Wash.2d at 449, 243 P.3d 521; Eastwood, 170 Wash.2d at 402, 241 P.3d 1256.
¶ 30 Despite the existence of contractual lease covenants “obligating Horse Harbor to maintain the farm and to return it to Eastwood in good condition,” lessor Eastwood brought a tort claim for waste against lessee Horse Harbor. Eastwood, 170 Wash.2d at 383, 241 P.3d 1256. The Supreme Court ruled that because the duty not to commit waste was independent of the lease, Eastwood could recover tort damages from her lessee.35 Eastwood, 170 Wash.2d at 383, 241 P.3d 1256. In his concurrence, however, Justice Chambers, joined by three justices, admonished, “This court may ․ decide whether a duty is cognizable in tort”; and, once it does, “it is for this court to decide if the tort duty should no longer apply to certain circumstances or events.” Eastwood, 170 Wash.2d at 408, 241 P.3d 1256 (Chambers, J., concurring). Justice Fairhurst's lead opinion combines with Justice Chambers' concurrence to comprise a majority of justices agreeing in Eastwood that the independent duty doctrine does not bar a tort claim merely because a contract, or other opportunity to allocate risk, also exists between the parties, as long as the tort claim arises independently of the contract or other similar relationship.
¶ 31 Issued the same day, Affiliated's analysis relied on Eastwood. Affiliated, 170 Wash.2d at 448, 243 P.3d 521. Again writing the lead opinion, Justice Fairhurst, joined by one justice, outlined why a broad reading of the economic loss rule was incorrect.36 Affiliated, 170 Wash.2d at 448, 243 P.3d 521. Reading Affiliated's lead opinion and Justice Chambers' concurrence together, it appears that as of 2010, a majority of our Supreme Court justices agreed that the independent duty doctrine should not bar a tort claim where an existing right to such relief has been established by the Court, despite the existence of a contract between the parties.
c. Elcon (2012)
¶ 32 Two years later, a majority of our Supreme Court adopted the independent duty doctrine: The Court reviewed the superior court's economic loss rule dismissal of Elcon's tort claims for damages after related drilling contract claims were resolved by mandatory arbitration.37 Elcon, 174 Wash.2d at 160, 165, 273 P.3d 965. Most instructive here, the Supreme Court expressly re-admonished:
[I]n Eastwood we directed lower courts not to apply the [independent duty] doctrine to [bar] tort remedies “unless and until this court has, based upon considerations of common sense, justice, policy and precedent, decided otherwise.”
Elcon, 174 Wash.2d at 165, 273 P.3d 965 (quoting Eastwood, 170 Wash.2d at 417, 241 P.3d 1256 (Chambers, J., concurring)). Consistent with this apparent reluctance to apply the independent duty doctrine to bar tort claims (at least outside real property sales and construction contexts), the Court further noted that it (1) had not applied the independent duty doctrine previously to bar a claim for fraud; and (2) found “no compelling reason, whether based on common sense, justice, policy, or precedent, to bar Elcon's fraud or tortious interference claim.”38 Elcon, 174 Wash.2d at 166, 273 P.3d 965.
d. Jackowski (2012)
¶ 33 The Jackowskis bought their home from the Borchelts but later sued them after a landslide damaged their home. Jackowski, 174 Wash.2d at 724–25, 278 P.3d 1100. The Jackowskis sought damages for fraud and negligent misrepresentation from the Borchelts, based primarily on disclosures that the Borchelts had made about landslides, land slippage, and material property defects; one fraud claim was also based on allegations that the property contained undisclosed estate sale context, the duty not to commit fraud is independent of the purchase and sale contract; (2) therefore, the independent duty doctrine permitted the plaintiff purchasers to pursue a fraud claim against the sellers, regardless of whether the parties had entered into a contract;39 and (3) similarly, the independent duty doctrine allows plaintiffs to bring negligent misrepresentation claims, “but only to the extent the duty to not commit negligent misrepresentation is independent of the contract.”40 Jackowski, 174 Wash.2d at 738, 278 P.3d 1100.
B. Application of Independent Duty Doctrine to Key's and Trinity's Tort Claims
1. Standards of review
¶ 34 Appellate courts review de novo a grant or denial of summary judgment by performing the same inquiry as the trial court. Hisle v. Todd Pac. Shipyards Corp., 151 Wash.2d 853, 860, 93 P.3d 108 (2004). Trial courts properly grant summary judgment when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Morin v. Harrell, 161 Wash.2d 226, 230, 164 P.3d 495 (2007).41
¶ 35 Appellate courts review for abuse of discretion trial court decisions granting or denying a motion for reconsideration. Drake v. Smersh, 122 Wash.App. 147, 151, 89 P.3d 726 (2004). A trial court abuses its discretion when its decision is manifestly unreasonable or rests on untenable reasons or grounds. In re Marriage of Littlefield, 133 Wash.2d 39, 46–47, 940 P.2d 1362 (1997)
2. Potential Port independent duties to Key and Trinity
¶ 36 The Port argues that “[t]he trial court dismissed the tort claims of both Trinity and Key based ․ upon its finding that no exception to the economic loss rule applied,” which finding is “tantamount to a finding that the Port owed no tort duties to either Key or Trinity.” Reply Br. of Appellant at 14–15. We disagree with the Port's latter assertion.
¶ 37 The trial court did not decide whether the Port owed, and then violated, tort duties to Key or Trinity, independent of Key's contract negotiations with the Port. Rather, the trial court ruled only that the Supreme Court's then existing iteration of the economic loss rule barred Key's tort claims against the Port and, therefore, Key was limited to its contract claims against the Port (which have not yet been litigated). Although the trial court rejected the Port's third-party contract beneficiary characterization of Trinity in ruling that the economic loss rule did not bar Trinity's tort claims, the trial court did not decide whether the Port owed a duty in tort to Trinity or whether Trinity had stated a viable tort claim against the Port for breach of such a duty.42
¶ 38 In dismissing Key's tort claims and granting Trinity's reconsideration motion to reinstate its tort claims, based on its understanding of the economic loss rule, the trial court appears to have relied on two factors: (1) the existence of a contract between the Port and Key, which presented those two parties an “opportunity to allocate risk,” but no such opportunity for Trinity; and (2) the economic nature of the resulting damages. VRP (June 18, 2010) at 13. The trial court's rationale for granting summary judgment against Key and for granting Trinity's motion for reconsideration was based on an understandable reading of the former economic loss rule as articulated at that time.
¶ 39 That understanding, however, is no longer correct under the Supreme Court's later decisions in Eastwood, Affiliated, and Jackowski. According to these more recent decisions, the trial court cannot automatically dismiss Key's tort claims against the Port based solely on the existence of a contract between them; instead, it must determine whether the Port's alleged breaches of claimed tort duties arose independently of the contract terms and it must do so on summary judgment taking the facts in the light most favorable to Key, regardless of the likelihood that Key would ultimately prevail on those claims at trial. Eastwood, 170 Wash.2d 380, 241 P.3d 1256; Affiliated, 170 Wash.2d 442, 243 P.3d 521; Jackowski, 174 Wash.2d 720, 278 P.3d 1100. Here, the trial court has not yet made such determinations.
a. Key's tort claims against the Port
¶ 40 As the Port correctly notes,
The trial court made no finding that any independent tort duty ran from the Port to Key, made no finding that there were any genuine issues regarding breach of any such duty, and dismissed Key's tort claims because, inter alia, there was no exception to the economic loss rule.
Reply Br. of Appellant at 35 (citing CP at 1044). But, contrary to the Port's assertion, the record does not show that the trial court's finding no exception to the economic loss rule for Key's tort claims was “tantamount to a finding that the Port owed no tort duties.”43 Reply Br. of Appellant at 14–15. Thus, we review de novo the trial court's application of the economic loss rule under the Supreme Court's later recharacterization of this rule and its transformation into the independent duty doctrine.
¶ 41 As we have already noted, the Elcon court directed lower courts not to apply the independent duty doctrine to bar tort claims, despite the existence of a contract between the parties, “unless and until” the Supreme Court has “decided otherwise.”44 Elcon, 1A Wn.2d at 165 (quoting Eastwood, 170 Wash.2d at 417, 241 P.3d 1256 (Chambers, J., concurring)). Despite previous Supreme Court rulings suggesting that the former economic loss rule barred tort claims related to real estate and construction contracts,45 in recent opinions the Court has refrained from applying the independent duty doctrine to bar tort claims based on potential duties arising in connection with, but independent of, real estate sales negotiations. As the dissent in Austin v. Ettl summarizes, “Overall, cases explaining the independent duty doctrine seem to indicate that claims and alleged damages arising from a contractual relationship, even those executed at arm's-length, are subject to a tort sieve.” Austin v. Ettl, 171 Wash.App. 82, 286 P.3d 85, 93 (2012) (Van Deren, J., dissenting).46
¶ 42 We apply this recent independent duty case law here, especially in light of the express admonition to lower courts not to reject potential tort claims, even if arguably contract-related, until the Supreme Court specifically so rules. Thus far, our Supreme Court has allowed claims to proceed for the following torts where the plaintiff can establish a tort duty owed by the defendant, independent of the related contract between them: Fraud, negligent misrepresentation, and tortious interference with contract.47 See Jackowski, 174 Wash.2d at 738, 278 P.3d 1100; Elcon, 174 Wash.2d at 165–66, 273 P.3d 965.
¶ 43 In Jackowski, the Court held that the plaintiff's fraud claims were independent of the related real estate purchase and sale contract and, therefore, allowable under the independent duty doctrine: “Because the duty to not commit fraud is independent of the contract, the independent duty doctrine permits a party to pursue a fraud claim regardless of whether a contract exists.” Jackowski, 174 Wash.2d at 738, 278 P.3d 1100. Although arguably dicta, the Supreme Court further opined that plaintiffs may bring contract-related negligent misrepresentation claims if the duty not to commit negligent misrepresentation is independent of the contract. Jackowski, 174 Wash.2d at 738, 278 P.3d 1100. Similarly, in Elcon, the Court opined, again arguably in dicta, that the independent duty rule did not bar plaintiff's tortious interference claim against the defendant, despite the existence of a related drilling contract. Elcon, 174 Wash.2d at 165–66, 273 P.3d 965. Thus, the Supreme Court's Jackowski holding and its admonitions in Eastwood and Elcon strongly suggest that the independent duty rule should not foreclose Key's opportunity to attempt proving its tort claims against the Port at trial.48
¶ 44 Accordingly, we reverse the trial court's grant of summary judgment to the Port on Key's tort claims and remand to the trial court to consider, in light of the Supreme Court's re-articulation of the independent duty doctrine in Jackowski,49 (1) whether there were any tort duties the Port owed Key that arose independently of the parties' contract (their LOI); and (2) whether there are genuine issues of material fact to defeat summary judgment and to support going to trial on Key's tort claims.50 We hold, therefore, that the independent duty rule does not bar Key's tort claims against the Port as a matter of law and that dismissal of these tort claims on summary judgment based on the economic loss rule was error.51
b. Trinity's tort claims against the Port
¶ 45 The trial court's certified issue—whether the independent duty doctrine applies to third party beneficiaries of a contract—and the interlocutory nature of this appeal limit the scope of our review to whether the former economic loss rule, since recharacterized as the independent duty doctrine, similarly bars Trinity's tort claims. We do not, therefore, consider whether Trinity can establish a valid tort claim against the Port; rather, we address only whether the independent duty doctrine bars Trinity's ability to raise these claims.
¶ 46 The Port argues that Trinity was a third party beneficiary of the contract with Key, and thus, it owed Trinity no duty independent of this contract. On the record before us, however, Trinity does not appear to have been a third party beneficiary of Key's contract with the Port. Rather, the record supports the trial court's conclusion that Trinity's involvement, if any, fell outside Key's property sale negotiations with the Port. Thus, we agree with the trial court that, because Trinity was neither a party to the contract nor a third party beneficiary, the economic loss rule/independent duty rule does not bar Trinity's tort claims against the Port.52
¶ 47 “A third-party beneficiary is one who, though not a party to the contract, will nevertheless receive direct benefits therefrom.” McDonald Constr. Co. v. Murray, 5 Wash.App. 68, 70, 485 P.2d 626, review denied, 79 Wash.2d 1009 (1971) (emphasis added). It is insufficient that performance of a contract may benefit a third party; rather, the contract must have been entered for that party's benefit, or the benefit must be a direct result of performance within the parties' contemplation. McDonald, 5 Wash.App. at 70, 485 P.2d 626. The contracting parties must intend to create such a relationship, with the promisor intending to assume a direct obligation to the third party at the time the contract is created. Ramos v. Arnold, 141 Wash.App. 11, 21, 169 P.3d 482 (2007) (citing Schaaf v. Highfield, 127 Wash.2d 17, 21 n. 5, 896 P.2d 665 (1995)). Determining the parties' intent requires determining whether performance under the contract necessarily and directly benefits the third party; again, an incidental or inconsequential benefit is insufficient. Warner v. Design & Build Homes, Inc., 128 Wash.App. 34, 43, 114 P.3d 664 (2005).
¶ 48 On the record before us, Trinity's relationship to the Key–Port LOI contract does not meet this standard and, therefore, Trinity fails to qualify as a third-party beneficiary. The record contains no evidence that the Port intended to assume a direct obligation to Trinity or that Trinity would directly benefit from performance of this contract. Thus, any benefit Trinity might have received from this contract, and from an eventual sale of the property under a never-realized purchase and sale agreement, would have been indirect. That Trinity might have saved rent money by leasing a different property, if Key had sold its property to the Port, would have been at best only an incidental result of Key's and the Port's LOI.
¶ 49 The record supports the trial court's conclusion that Trinity was neither a party to the Key–Port contract nor a third-party beneficiary. Therefore, we hold that the independent duty doctrine does not bar Trinity's tort claims against the Port. And we affirm the trial court's reinstatement of those claims and denial of summary judgment to the Port.53
II. Objection to “Plaintiffs' Statement of Uncontested Facts—Corrected”
¶ 50 Claiming a violation of RAP 10.3(a)(5), the Port moves to strike from Key and Trinity's appellate brief their citation to a document included in the clerk's papers at 1690–1727, “Plaintiffs' Statement of Uncontested Facts—Corrected.” According to the Port, this document
consists of trial counsel's own “summaries” of statements found in various other pleadings, declarations, and depositions, taken out of context, many of which are not “summaries” at all, but are instead conclusory misrepresentations of the facts or are, at best, misleading.
Reply Br. of Appellant at 1. The Port argues that (1) the trial court never found any of the facts set out in this document, (2) the Port objected below to the document,54 and (3) we and the Port are “forced to search for the page number cited within the ‘Statement of Uncontested Facts' and then search again for the actual page in the record on which the asserted ‘facf is found.” Reply Br. of Appellant at 1–2.
¶ 51 Key and Trinity respond that this document “was part of the trial record, was considered by the trial court, and was duly designated in the clerk's papers” and that the Port chose not to contest most of the facts with the trial court. Reply Br. of Resp't at 4–5. The record supports these assertions.55
¶ 52 The question before us is whether we should treat the Port's objection as a motion to strike the document as non-compliant with RAP 10.3(a)(5). RAP 10.3(a)(5) requires an appellant to include “[a] fair statement of the facts and procedure relevant to the issues presented for review, without argument” and with reference to the record “included for each factual statement.” This document was part of the record the trial court considered. We can determine internal references within the document using the index filed with the court under RAP 9.7; thus, we perceive no violation of RAP 10.3(a)(5). Accordingly, we deny the Port's motion to strike all references to “Plaintiffs Statement of Uncontested Facts—Corrected.”
¶ 53 We deny the Port's request to strike “Plaintiffs' Statement of Uncontested Facts—Corrected.” We reverse the trial court's summary judgment dismissal of Key's tort claims against the Port. We affirm the trial court's reinstatement of Trinity's tort claims against the Port and the trial court's corresponding denial of summary judgment to the Port on these claims. And we remand to the trial court to consider (1) whether, under Jackowski, Key can show that the Port owed it a tort duty independent of their contract; (2) whether Trinity can show that the Port owed it a tort duty; and (3) if Key or Trinity establish such tort duties, whether there exist genuine issues of material showing breaches of these duties to survive summary judgment and to go to trial.56
¶ 54 While I concur with my colleagues, I write separately to stress that we accepted discretionary review of this case solely to determine whether the former “economic loss” rule—now the independent duty doctrine—requires dismissal of Key Development and Trinity's claims against the Port. But our Supreme Court has “directed lower courts not to apply the [independent duty] doctrine to tort remedies ‘unless and until [the Washington Supreme Court] has, based upon considerations of common sense, justice, policy and precedent, decided otherwise.’ “ Elcon Const., Inc. v. E. Wash. Univ., 174 Wash.2d 157, 165, 273 P.3d 965 (2012) (quoting Eastwood v. Horse Harbor Found., Inc., 170 Wash.2d 380, 417, 241 P.3d 1256 (2010) (Chambers, J., concurring). Although our Supreme Court's independent duty doctrine jurisprudence is woefully unclear, the only rational reading of Elcon is that lower courts should presume that a tort duty exists unless and until the Washington Supreme Court has decided otherwise. Accordingly, remand is required in this case.57
I concur: WORSWICK, C.J.