Opinion
No. 64371-1-I.
April 4, 2011. UNPUBLISHED OPINION
Appeal from a judgment of the Superior Court for Snohomish County, No. 08-2-05863-6, Michael E. Rickert, J. Pro Tem., entered October 26, 2009.
Affirmed by unpublished opinion per Ellington, J., concurred in by Becker and Spearman, JJ.
Frank Rozzano appeals from a summary judgment dismissing his claims against his adult children as barred by the statute of limitations. We affirm.
BACKGROUND
Frank and Velda Rozzano had four children. About two years before Velda's death in early 1994, they consulted attorney William Dussault about estate planning and future convalescent care. Dussault advised them they could become eligible for Medicaid by gifting their estate to their adult children. Though Dussault emphasized there could be no quid pro quo, he recommended that the children put the assets into a living trust to benefit Frank and Velda during their lives and to provide for their grandchildren's education. Velda died before this plan was implemented.
The parties are referred to by their first names for clarity.
In May 1994, Dussault prepared a draft assignment of interest and quit claim deed for Frank's review. The assignment of interest provided:
For love and affection, FRANK A. ROZZANO, a widower, as his separate estate, hereby assigns, quit claims, transfers and conveys, for all purposes, all interest, whether real or personal, of whatever kind and nature, and wheresoever located, now owned or hereafter acquired, in the properties listed on Exhibit A attached hereto, from FRANK A. ROZZANO to THERESA A. ROZZANO-PRESTON, MARA J. ROZZANO, ROBERT E. ROZZANO, AND DONNA MARIE WHITE, in equal undivided shares as their separate estates.
Clerk's Papers (CP) at 131.
Exhibit A listed three properties, including Frank and Velda's home, the "Corliss property." The draft quit claim deeds indicated the conveyance was "in consideration of love and affection."
CP at 213, 216, 219.
At the same time, Dussault sent Frank drafts of a living trust agreement for the children's consideration and of correspondence to the children about the trust. The draft letter advised:
We understand it is your intent to gift the assets you have received from your father to a Living Trust for his benefit. You are under no legal obligation to do so. We also wish to confirm that your father's gift to you of these assets is without legal condition or restriction. The assets gifted to you become yours to do with as you please.
CP at 111. The draft also referred to life estates to be retained by Frank, which apparently were never created.
The draft trust document detailed how the trustee-children could distribute assets to Frank without compromising his eligibility for government benefits. The instrument also provided that the trustees could distribute assets to their own children for education or emergency purposes.
It appears Frank's children generally thought the trust was a good idea and intended to take care of Frank "no matter what." But they had concerns about the terms of the trust, as well as its tax implications. The children contemplated forming a partnership to manage the assets instead, but after Theresa consulted with a financial planner, they rejected that idea.
CP at 92.
In January 1996, Theresa wrote to Dussault at Frank's request. Theresa related that Frank was considering remarriage to a woman who was "very much against the trust." The prospect had raised certain questions, including whether Frank could be "one of the trustees, so that he may have some say in the control of the trust." At a subsequent meeting, Dussault was emphatic that Frank could have no say or control over the assets if they were to be protected for purposes of Medicaid eligibility. Dussault also told Frank "very clearly that once the money passed, [the children] could turn their backs on you and walk away, and there's nothing that can be done."
CP at 116.
CP at 117.
CP at 93 (Theresa's deposition).
The following month, Frank used the draft documents provided two years earlier to execute the assignment of interest and quit claim deeds for the three properties. At his request, Theresa went with him to a bank and filled in the date, county, and legal descriptions of the properties. Frank signed the documents before a notary and asked Theresa to have them recorded in the appropriate counties. Despite the broad language of the assignment of interest, Frank did not convey his corporate shares in a shopping center, worth an estimated $1 million at the time of this suit.
Frank has no present recollection of signing the documents. He does not know where he signed them, whether Dussault or any of the children were present, or whether any of his children influenced him to sign them.
Over the next several months, Theresa had the documents recorded and returned to Dussault, who forwarded the original deeds to Frank and advised that they "should be stored in a safe place, quite probably with one of your four children, who are now the owners of the property."
CP at 222.
By February 1998, Frank no longer lived in the Corliss property. The Rozzano children sold the home and divided the proceeds among themselves.
In October and December 1998, the children provided Frank two copies of a written statement entitled "Account Activity For Trust." A note at the top of each states, "Grandpa — FYI — here is a `running update' on what is going on with your stuff." The statements include payments, bank transfers, and other administrative activity related to the transferred properties. At the end of the first of these statements is the note: "don't forget, Grandpa, that you said you would check into a Living Trust, etc. Let us know what you find out."
CP at 137-38, 140-41.
CP at 137, 140.
CP at 138.
Between January and June 1999, Dussault and the children exchanged correspondence concerning the proposed trust. Dussault revised the draft and sent copies to the children. Receiving no response, Dussault advised that he would take no further action until they contacted him again. He sent Frank copies of all correspondence. In March 2000, Dussault wrote Frank to advise him that "[t]he Living Trust that was prepared for you in May has not yet been completed as we are in need of information. . . . Please let us know if you wish to finalize the Trust and we will be happy to assist you."
CP at 57.
Although the children never executed a trust, they provided Frank with financial support. In March 1999, they purchased a condominium for Frank, where he lived until he married his current wife, Frieda, in August 2005. The children also paid for fishing trips, dental expenses, and for the wedding to Frieda. The children sometimes refused Frank's requests, however, including at least once around the time they purchased the condominium.
In 2002, Robert held funds remaining from Frank's asset transfer in his own bank account. After an inquiry from the Internal Revenue Service, Robert's tax advisor suggested he distribute the cash among the siblings so each would be responsible for his or her own funds. Robert says he discussed this with his father, and Frank agreed the account should be split up and divided among the four children. Robert obtained three cashier's checks for between $62,000 and $72,000, which Frank handed out at Christmas in "a ceremonial fashion."
CP at 204 (Robert's declaration); see also CP at 75-76 (Robert's deposition); CP at 195 (Mara's declaration). Though he did not receive a check, Robert's share of the money was around $39,000. The difference in amounts reflected withdrawals that Donna and Robert had already taken.
Frank has no recollection of discussing the distribution with Robert and no recollection of Christmas 2002 except that he was "probably" intoxicated.
CP at 238 (Decl. of S. Duncan quoting excerpt of Frank's deposition).
Frank experienced a mild stroke in 2004 or 2005. He remarried in 2005, after which his alcohol consumption increased. He became forgetful, repeatedly asked the same questions, and was unable to recall his grandchildren's names. He began asking questions about the transferred property. He asked Theresa, "Why didn't we — why didn't we put this into like a partnership or a trust? Why didn't — why did I have to transfer this over? What assets were there transferred over? Whatever happened to my IRA accounts?" Theresa says she answered Frank's questions to the best of her ability and refreshed his memory by "saying, Dad, you know why this was done. You and mom were the ones who instigated it. And I went through the scenario, the history of what happened. And he would say, `Oh yeah. Yeah. Yeah.'"
CP at 98 (Theresa's deposition).
Id.
In October or November 2005, Frank hired attorney Bruce Bell to inquire about the property Frank had assigned to the children and to revoke the power of attorney he had at some point given to Theresa. Theresa had a brief phone conversation with Bell and never heard from him again.
Frank moved in with Frieda after they married, so the children sold the condominium in March 2006 and split the proceeds among themselves.
In 2007, Frank hired his current counsel, Daniel Laurence. Frank was concerned that the children had refused to provide several thousand dollars for a fishing trip with Frieda. Laurence advised the children of this concern and demanded the funds for the trip and an accounting. When the children failed to respond, Laurence wrote again in November 2007 demanding the children sell the two remaining properties, complete payment for the fishing trip, and provide Frank $8,000 for a truck he had purchased. In May 2008, Laurence sent them a "termination and revocation of assignment of interest," which Frank had executed in January 2007.
CP at 157.
On July 10, 2008, Frank filed this lawsuit alleging seven causes of action, including misrepresentation and fraud, undue influence, conversion, breach of trust and fiduciary duty, promissory estoppel, and negligent and intentional infliction of emotional distress.
The trial court granted the children's motion for summary judgment, finding all claims barred by the statute of limitations.
DISCUSSION
Frank contends the court erred in concluding that all claims are time-barred and in rejecting his argument that his children are estopped from asserting the limitations defense. Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. All facts and reasonable inferences are considered in the light most favorable to the nonmoving party, and summary judgment is appropriate only if, from all the evidence, reasonable persons could reach but one conclusion. The moving party has the burden to show that there is no genuine issue of material fact. Once the moving party satisfies that burden, the nonmoving party must present evidence showing that material facts are in dispute. Summary judgment is proper if the nonmoving party fails to do so.
Vallandigham v. Clover Park Sch. Dist. No. 400, 154 Wn.2d 16, 26, 109 P.3d 805 (2005) ("we engage in the same inquiry as the trial court"); CR 56(c).
Vallandigham, 154 Wn.2d at 16 (citingAtherton Condo. Apartment-Owners Ass'n Bd. of Dirs. v. Blume Dev. Co., 115 Wn.2d 506, 516, 799 P.2d 250 (1990);Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982)).
Id.
Id.
Statute of Limitations
Frank filed suit on July 10, 2008. His causes of action are subject to a three year statute of limitations and the discovery rule applies. Under the discovery rule, a cause of action accrues when the plaintiff discovers, or in the reasonable exercise of due diligence should discover, the elements of a cause of action. "This does not mean that the action accrues when the plaintiff learns that he or she has a legal cause of action; rather, the action accrues when the plaintiff discovers the salient facts underlying the elements of the cause of action." Though the question of due diligence is ordinarily a question of fact, the issue can be decided as a matter of law if reasonable minds could reach but one conclusion.
RCW 4.16.080(2) (conversion), (3) (actions on implied contract like promissory estoppel), (4) (fraud); see also In re Interest of Perry, 31 Wn. App. 268, 272, 641 P.2d 178 (1982) (fraud, undue influence); Crisman v. Crisman, 85 Wn. App. 15, 19, 931 P.2d 163 (1997) (conversion); Goodman v. Goodman, 128 Wn.2d 366, 373, 907 P.2d 290 (1995) (breach of trust, fiduciary responsibility based upon constructive trust theory); St. Michelle v. Robinson, 52 Wn. App. 309, 314, 759 P.2d 467 (1988) (negligent or intentional infliction of emotional distress).
1000 Virginia Ltd. P'ship v. Vertecs Corp., 158 Wn.2d 566, 575-76, 146 P.3d 423 (2006).
Id.
Douglass v. Stanger, 101 Wn. App. 243, 256, 2 P.3d 998 (2000).
Among other things, Frank's claims for misrepresentation/fraud and promissory estoppel require proof that the children represented they would use the transferred assets for his benefit. His conversion and constructive trust claims require proof that the children improperly took the assets for their own use or would be unjustly enriched by keeping it. His undue influence claim requires proof that the children exercised unfair persuasion, interfered with his free will, and prevented his exercise of judgment and choice. Finally, his negligent and intentional infliction of emotional distress claims require proof that the children caused him emotional injury and damage through negligence or outrageous conduct. The question here is thus whether the evidence shows that, as a matter of law, Frank knew or should have known of facts supporting each of his claims before July 10, 2005. We conclude that it does.
See West Coast, Inc. v. Snohomish Cnty., 112 Wn. App. 200, 206, 48 P.3d 997 (2002) (intentional misrepresentation or fraud requires proof of the defendant's knowing false representation of material fact, plaintiff's rightful reliance on the representation with ignorance of its falsity, and damages); Corey v. Pierce Cnty., 154 Wn. App. 752, 768, 225 P.3d 367, review denied, 170 Wn.2d 1016 (2010) ("Promissory estoppel requires `(1) a promise which (2) the promisor should reasonably expect to cause the promisee to change his position and (3) which does cause the promisee to change his position (4) justifiably relying on the promise, in such a manner that (5) injustice can be avoided only by enforcement of the promise.'" (quoting Corbit v. J.I. Case Co., 70 Wn.2d 522, 539, 424 P.2d 290 (1967))).
Westview Invs., Ltd. v. U.S. Bank Nat'l Ass'n, 133 Wn. App. 835, 852, 138 P.3d 638 (2006) ("`[C]onversion is the act of willfully interfering with any chattel, without lawful justification, whereby any person entitled thereto is deprived of the possession of it.'" (quoting PUD of Lewis Cnty. v. WPPSS, 104 Wn.2d 353, 378, 705 P.2d 1195 (1985) (alteration in original))); In re Estate of Krappes, 121 Wn. App. 653, 664, 91 P.3d 96 (2004) (constructive trust arises "where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it." (internal quotation marks omitted) (quoting Baker v. Leonard, 120 Wn.2d 538, 547-48, 843 P.2d 1050 (1993))).
Ferguson v. Jeanes, 27 Wn. App. 558, 563, 619 P.2d 369 (1980) (undue influence requires proof that defendant exercised such persuasion as to destroy plaintiff's own free agency).
Strong v. Terrell, 147 Wn. App. 376, 387, 195 P.3d 977 (2008).
First, Frank's own testimony establishes that he believed the children had made misrepresentations to him about the property as early as January 1994, when Velda died. By "three or four years after Velda died," Frank was aware that the children were not giving him the rental proceeds from the properties he had transferred. In 1998, the children sold his home and kept the proceeds. In 1999, he asked them for money and they refused. He testified he knew then that the "money was gone." And at Christmas in 2002, Frank knew Robert divided the remaining cash to distribute among his siblings. He even participated in doing so.
CP at 242 (Decl. of S. Duncan quoting Frank's deposition).
Id. at 241.
Frank does not dispute that this occurred: "I don't remember that. I won't say that it didn't happen, but I don't remember it." CP at 238 (Decl. of S. Duncan quoting Frank's deposition).
The undisputed evidence is that Frank knew no later than December 2002 that the children were not holding the assets for his benefit but instead were exercising their rights of ownership for their own benefit. The claims for fraud and misrepresentation, promissory estoppel, and conversion are therefore barred.
The same evidence precludes Frank's breach of trust and fiduciary duty claims, which rely on a constructive trust theory. "A constructive trust is an equitable remedy that arises where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it." "A trial court may impose a constructive trust where there is clear, cogent and convincing evidence supporting it."
Krappes, 121 Wn. App. at 664 (internal quotation marks omitted) (quoting Baker, 120 Wn.2d at 547-48).
Id.
As the trial court observed, "The linchpin for constructive trust basically is unjust enrichment." Though all parties contemplated a living trust for Frank, he unconditionally gifted his assets to the children knowing they were under no obligation to use the assets for his benefit. Under these circumstances, there was no unjust enrichment.
Report of Proceedings (Oct. 9, 2009) at 65.
Further, Frank knew or should have known the children were keeping the property for themselves long before July 10, 2005. He knew the children had not created a trust no later than 2000 when Dussault wrote him about it. He knew the children were keeping proceeds from the rental property and the sale of the Corliss property by 1998. And he knew the children would not honor all requests for money in 1999. Frank was aware of any breach of fiduciary duty or unjust enrichment long before the limitations period expired, and those claims are barred. And to the extent Frank relies on breach of a duty to hold the assets for his benefit as the basis for his negligent infliction of emotional distress claim, that cause of action is likewise barred.
Frank argues the court erred by making this inference on summary judgment because "[t]he existence and mailing of the letter, without proof of receipt, do not preclude an inference that Frank thought that the trust document had been executed or that the assets would be treated as being in trust independent of such a document." Br. of Appellant at 39. Proof of mailing raises the presumption that the letter was received by the person to whom it was addressed. Scheeler v. Dep't of Emp't Sec., 122 Wn. App. 484, 489, 93 P.3d 965 (2004). In summary judgment, once the defendant comes forward with evidence, such as this letter, that undermines the plaintiff's claim, the plaintiff must present evidence establishing a genuine question of fact. Vallandigham, 154 Wn.2d at 26. Thus, it was Frank's burden to create a question of fact as to the receipt of the letter. He did not do so.
Frank offers a puzzling argument concerning this claim: "If `clear, cogent and convincing' evidence is required to establish a constructive trust, then, Frank Rozzano contends, that same high level of notice must be evident to the plaintiff, or reasonably discoverable by him, before the plaintiff is required to trigger a duty to sue to commence the limitations period." Br. of Appellant at 30-31 (citation omitted). Presumably, Frank means that his claim for breach of trust and fiduciary duty did not accrue until he had "clear, cogent and convincing" evidence that the children were not holding the transferred property for his benefit. Frank cites no authority for this proposition, but it fails in any event because Frank had sufficient notice as outlined above.
Frank does not address his intentional infliction of emotional distress claim in his brief, but his failure to specify in his complaint any outrageous action or omission causing him distress within three years before he filed suit precludes this cause of action.
The undue influence claim fails both on statute of limitations grounds and for lack of any evidence to support it. Frank has no recollection of signing the assignment of interest or quit claim deeds or whether any of his children influenced him to do so. He has produced no contemporaneous evidence that the children exerted any influence over him and has not explained when he became aware of it. At the time he executed the assignment and quit claim deeds, he was living independently and managing his own personal and financial affairs. Most significantly, he had his own counsel, with whom he was in contact about this very subject from 1994 through 2000, and he never questioned the transfer or sought to revoke it. If Frank transferred the assets under undue influence, he should have discovered it before July 2005.
See CP at 230-37 (Decl. of S. Duncan quoting Frank's deposition).
Estoppel
Frank contends he and the children had a confidential relationship, which imposed upon them a fiduciary-type duty to advise Frank of all facts material to the enforcement of his claims. Because the children failed to inform him they were not holding the assets for his benefit, Frank argues the estoppel in pais doctrine prevents them from asserting the statute of limitations defense. We disagree.
"Estoppel in pais generally applies where a defendant has concealed facts or otherwise induced the plaintiff to bring an action after the expiration of the applicable statute of limitations." Even if there was a confidential relationship in this case, Frank offers no evidence that the children's conduct induced him not to bring an action within the statute of limitations.
Cotton v. City of Elma, 100 Wn. App. 685, 697, 998 P.2d 339 (2000); see also Proctor v. Huntington, 146 Wn. App. 836, 845, 192 P.3d 958 (2008) ("Estoppel in pais requires the claimant to prove that (1) the owner made an admission, statement, or act inconsistent with a claim afterwards asserted, (2) the other party acted on the faith of such admission, and (3) allowing the owner to contradict or repudiate his admission, statement, or act would result in injury to the other party.").
Frank points to the fact that Theresa spoke with a financial planner about the proposed trust without him as evidence of some concealment, but Theresa testified she discussed what she learned from the planner with Frank. He implies Theresa did something underhanded by helping him fill out the assignment of interest and quit claim deeds, but she merely inserted the date, county and legal description of the properties. She testified she did this at Frank's request, and he offers no evidence to the contrary.
He also suggests the fact that the children never told him they would not execute the trust proves they concealed that fact, but such an inference is belied by the children's transparent exercise of dominion and control over the assets. Because there is no evidence to support Frank's contentions that the children concealed facts or made representations or promises to him which lulled him into delaying timely action to file suit against them, the doctrine does not apply.
Further, "`[f]acts and circumstances which create an estoppel at one point in time do not justify an unreasonable suspension of the statute of limitations. A party claiming estoppel to prevent an inequitable resort to the statute of limitations may not sleep on his rights.'" Even if the children endeavored to conceal that they were not holding the assets for Frank's benefit, there can be no doubt Frank realized that was not the case more than three years prior to filing suit. Because Frank has not shown due diligence in filing suit after any estoppel period ended, summary judgment was appropriate.
Peterson v. Groves, 111 Wn. App. 306, 315, 44 P.3d 894 (2002) (quoting Central Heat, Inc. v. Daily Olympian, 74 Wn.2d 126, 135, 443 P.2d 544 (1968)).
Id. at 316.
Affirmed.