Shepard v. Holmes

185 Wash.App. 730

345 P.3d 786

Sharon SHEPARD, Appellant

v. David HOLMES and Lorraine Holmes, DefendantsEra Sun River Realty and Chicago Title Insurance Company, Respondent.

No. 31740–4–III.

Court of Appeals of Washington, Division 3.

Dec. 23, 2014.

Publication Ordered Feb. 19, 2015.

Benjamin Winters Dow, Dow Law Firm, Richland, WA, for Appellant.

Matthew Rick Cleverley, Fidelity National Law Group, Seattle, WA, Shea Cornelison Meehan, Walker Heye Meehan & Eisinger PLLC, Richland, WA, for Respondent.

SIDDOWAY, BROWN and KORSMO, JJ.

OPINION PUBLISHED IN PART

SIDDOWAY, C.J.

¶ 1 Sharon Shepard appeals the trial court's summary judgment dismissal of misrepresentation and related claims she asserted against ERA Sun River Realty and Chicago Title Insurance Company, and its denial of her motion for leave to amend her complaint to assert a contract claim against Sun River.

¶ 2 The trial court properly concluded that her causes of action all accrued in July 2007 and were time barred by the time she sued in December 2012. The denial of Ms. Shepard's motion for leave to amend is affirmed on the basis that she had no viable breach of written contract claim against Sun River and amendment would have been futile. We affirm the trial court in all respects and award attorney fees and costs on appeal to Sun River.

FACTS AND PROCEDURAL BACKGROUND

¶ 3 In July 2007, Sharon Shepard and her former husband entered into a real estate contract to purchase a parcel of land located in Benton County as an investment property. The purchase and sale agreement described the property as “Lots 1, 2, 3, & 4 Short Plat # 865.” Clerk's Papers (CP) at 107. Ms. Shepard believed that the property consisted of four lots that could be re-sold individually.

¶ 4 Chicago Title Insurance Company issued a preliminary commitment and title insurance policy in connection with the sale. The policy described the covered property as “Lots 1, 2, 3 and 4, as delineated on Short Plat No. 865” and included a copy of the short plat that depicted four lots. CP at 141. The short plat copy bore a stamp that stated, “This plat is for your aid in locating your land with reference to streets and other parcels. While this plat is believed to be correct, the company assumes no liability for any loss occurring by reason of reliance thereon.” CP at 145.

¶ 5 In the summer of 2011, Ms. Shepard decided to sell two of the lots. She contacted the Benton County Planning Department to inquire about whether one well could be used as a community well for two of the four lots and to learn about the septic requirements. According to Ms. Shepard, the head of the planning department told her at that time that in 1998 the owner of the property had recorded a “Deed of Consolidation” that consolidated the four lots into a single parcel. CP at 27. The planning department head reportedly told her that she could have rescinded the deed in 2007 after she purchased the property, but that she could no longer sell the lots separately because county density requirements had since changed. Our record includes no declaration of the planning department head nor does it contain a copy of the Deed of Consolidation. We rely, as the parties evidently did, on Ms. Shepard's report of what she was told.¹

¶ 6 Ms. Shepard filed a claim of loss with Chicago Title, which responded after investigation that neither the existence of the consolidation deed nor the intervening change in zoning requirements presented a loss insured by the title policy.

¶ 7 In December 2012, Ms. Shepard filed a complaint for breach of contract; misrepresentation; violations of the Washington Consumer Protection Act (CPA), chapter 19.86 RCW; and failure to pay an insurance claim in bad faith. She named as defendants David and Lorraine Holmes, who had sold the property to Ms. Shepard and her former husband; Sun River, the Holmeses' real estate agent; and Chicago Title. The complaint alleged that Ms. Shepard was told by the Holmeses, “through their real estate agent ERA,” and “by others including Chicago Title,” that the individual lots could be separately sold, and that these misrepresentations induced her to purchase the property. CP at 2. She alleged that the property had less value if it had to be sold as a single, undivided parcel rather than as four separate lots.

¶ 8 In the section of her complaint entitled “Causes of Action,” Ms. Shepard alleged a claim for breach of contract against the Holmeses, claims of misrepresentation and violation of the CPA against Sun River, and claims of misrepresentation and bad faith (failure to pay a covered claim and disclose recorded defects of title) against Chicago Title.

¶ 9 Within a couple of months of Ms. Shepard's filing the complaint, Sun River moved to dismiss her misrepresentation and CPA claims against it pursuant to CR 12(b)(6), arguing that the claims were time barred on their face. Ms. Shepard responded that the discovery rule applied to her claims, with the result that the statutes of limitation did not begin to run until she discovered the existence of the consolidation deed in 2011. She also brought to the court's attention that she had not had a copy of her real estate purchase and sale agreement at the time she filed her complaint and had only recently been able to obtain a copy, by subpoena.

¶ 10 The trial court conducted hearings on Sun River's motion in March. Because the parties had submitted declarations addressing matters outside of the scope of the pleadings, the trial court treated the motion as one for summary judgment. At the conclusion of the hearings, the trial court orally ruled that the recorded consolidation deed constituted constructive notice to all subsequent purchasers of the property, with the result that Ms. Shepard's causes of action for negligent misrepresentation and violation of the CPA accrued no later than the closing of her purchase of the property in July 2007. Because more than five years had passed before she filed her complaint, the three- and four-year statutes of limitations for the misrepresentation and CPA claims, respectively, had run.

¶ 11 In ruling on the motion, the court observed that while Ms. Shepard had made reference in her opposition to a recently discovered contract, “[t]here is no claim for breach of contract that has been filed in this case in regard to [Sun River].” Report of Proceedings (RP) (Mar. 29, 2013) at 29.

¶ 12 Ms. Shepard immediately responded that “the complaint does allege a breach of contract.” Id. She asked, if her pleading was not sufficiently specific, that she be permitted to file a motion to amend the complaint to assert a claim of breach of written contract claim against Sun River—a claim subject to a six-year statute of limitations, and that would not be time barred. See RCW 4.16.040(1). Without entertaining further argument, the trial court reiterated that it had reviewed the complaint, saw no breach of contract claim against Sun River, and was denying the request for leave to file a motion to amend.

¶ 13 In early May, after being served with Sun River's proposed order dismissing her claims and a notice of presentment, Ms. Shepard filed a written motion for leave to amend her complaint along with a proposed amended complaint. The amended complaint included an allegation that Sun River was a “signatory party” to the purchase and sale agreement by which Ms. Shepard and her former husband purchased the property. CP at 313.

¶ 14 The court addressed Sun River's proposed dismissal order, a request by Sun River for attorney fees, and Ms. Shepard's motion to amend at a hearing held on May 17. At Sun River's request, the court first entertained presentment of the order dismissing the claims against Sun River. The court signed the order as presented. It then addressed Ms. Shepard's motion to amend.

¶ 15 With the order of dismissal having been entered, Sun River argued that it was no longer a party to the action, rendering Ms. Shepard's motion to amend untimely, and alternatively, that amendment was futile. The trial court agreed that the motion to amend was untimely and denied it.

¶ 16 The court awarded Sun River attorney fees in the amount of $8,413, finding that by the terms of the real estate purchase and sale agreement, Sun River, as the real estate broker or licensee, was entitled to its attorney fees from litigation arising out of the real estate transaction.

¶ 17 Meanwhile, in early April, Chicago Title had filed its own motion for summary judgment. It argued, as Sun River had, that Ms. Shepard's misrepresentation and CPA claims were time barred. It also argued that her bad faith claims failed as a matter of law on the merits because it was undisputed that (1) it had investigated and resolved her claim under its policy, (2) it had no duty to disclose the consolidation deed, and (3) its title policy did not cover the claim.

¶ 18 Once again, Ms. Shepard argued that the court should apply the discovery rule in determining when her causes of action accrued. She did not respond to Chicago Title's arguments that her bad faith claims failed as a matter of law on the merits.

¶ 19 The hearing on Chicago Title's motion was held in late May, The court granted the motion.

¶ 20 Ms. Shepard appeals the orders dismissing her claims against Sun River and Chicago Title, the court's denial of her oral and written motions for leave to amend her complaint, and the order awarding attorney fees to Sun River.

ANALYSIS

¶ 21 Ms. Shepard fails to make assignments of error in her opening brief, but it is clear from her argument that she asserts four. She argues that the court erred or abused its discretion in (1) concluding that her misrepresentation and CPA claims were time barred, (2) concluding that her original claim did not sufficiently plead a contract claim against Sun River, (3) denying her leave to amend her complaint to assert a contract claim, and (4) awarding attorney fees to Sun River. We address the issues in turn.

I. The trial court correctly concluded...