Umpqua Bank v. Gunzel

19 Wash.App.2d 16

501 P.3d 177

UMPQUA BANK, Respondent,

v.Charles A. GUNZEL, III, and Ginelle F. Gunzel, husband and wife, Appellants.

No. 37400-9-III

Court of Appeals of Washington, Division 3.

Filed August 24, 2021

Bret Jeffery Uhrich, Walker Heye Meehan & Eisinger PLLC, 1333 Columbia Park Trl Ste. 220, Richland, WA, 99352-4713, for Appellants.

Daniel Andrew Brown, Sean Douglas Leake, Williams Kastner, 601 Union St. Ste. 4100, Seattle, WA, 98101-1368, for Respondent.

PUBLISHED OPINION

Fearing, J. ¶ 1 This is our second published opinion in this appeal. In our first opinion, we ruled that the Oregon statute of limitations barred Umpqua Bank's suit against Charles Gunzel on his guaranty of a hefty debt owed by the borrower Cornerstone Building Company. Umpqua Bank v. Gunzel , 16 Wash. App. 2d 795, 483 P.3d 796 (2021).

¶ 2 Umpqua Bank seeks reconsideration of our opinion based on new evidence and fraud. Along with its motion for reconsideration, the bank moves this court to supplement the evidentiary record. We elect, pursuant to RAP 17.6(b), to resolve the two related motions with an opinion.

¶ 3 Based on a newly produced record that shows one or more payments to the bank by guarantor Charles Gunzel personally, rather than the debtor corporation, Cornerstone Building Company, Umpqua Bank now asserts that Gunzel prevaricated in a declaration opposing the bank's summary judgment motion. Umpqua Bank also contends that Gunzel's personal payments extended the accrual of the statute of limitations. In turn, Umpqua Bank requests that we reverse our ruling in favor of Charles Gunzel because Gunzel perjured himself in his declaration and because this court decided the appeal on the basis that Gunzel tendered no personal payments when the parties did not litigate this factual question. Umpqua Bank asks that we grant it judgment against Gunzel.

¶ 4 We exercise our discretion to deny Umpqua Bank's motion to supplement the record because the bank did not seek to enhance the factual record until after the issuance of the court's opinion, because the bank should have produced the relevant document in response to a discovery request, and because the equities do not favor the bank. We deny the motion for reconsideration because we decline to review new evidence and because this court based its earlier decision on an issue litigated by the parties.

FACTS

¶ 5 We refer the reader to our first opinion for most of the underlying facts behind the suit by Umpqua Bank against Charles Gunzel. Umpqua Bank v. Gunzel , 16 Wash. App. 2d 795, 483 P.3d 796 (2021). We briefly recap those facts.

¶ 6 On June 27, 2007, Cornerstone Building, Co., a corporation, borrowed $200,000 from Umpqua Bank. The maturity date for the entire debt, under the promissory note signed by Cornerstone, was May 28, 2009. Charles Gunzel, the president of Cornerstone, executed a commercial guaranty, under which Gunzel guaranteed Cornerstone's payment of the $200,000 indebtedness to Umpqua Bank. The guaranty addressed the statute of limitations for any claim on the guaranty and read in part:

Guarantor also waives any and all rights or defenses based on suretyship ... but not limited to, any rights or defenses arising by reason of ... any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations.

Clerk's Papers (CP) at 71 (emphasis added). The guaranty read that Oregon law controlled the parties' relationship.

¶ 7 On May 28, 2009, the maturity date of the promissory note, Cornerstone defaulted on its obligations by failing to pay the note in full. Nevertheless, according to the record on summary judgment, the corporation periodically made late payments on the loan until December 16, 2013.

PROCEDURE

¶ 8 The relevant facts behind this second ruling are the procedures in the superior court during the summary judgment motion process and the procedures in this appellate court since we issued our ruling. On March 28, 2019, Umpqua Bank filed suit against Charles Gunzel on his personal guaranty. Gunzel raised the defense of the statute of limitations and contended that the statute commenced to run on the default by debtor Cornerstone Building on May 28, 2009. Umpqua argued that the statute of limitations did not begin to run until the last late payment on December 16, 2013.

¶ 9 On May 21, 2019, Gunzel propounded interrogatories and requests for production to Umpqua Bank. Among other documents requested, Gunzel sought the following:

REQUEST FOR PRODUCTION NO. 2: Please provide copies of all records showing payments on the obligation and the balance owing after each such payment.

CP at 22. Umpqua Bank produced only one document in response, an "Umpqua Bank Loan Accounting System Note Transcript Statement." CP at 77. Umpqua Bank employee, Lisa Redcay, signed and verified the bank's document response.

¶ 10 Charles Gunzel's counsel thereafter identified for Umpqua Bank its deficiencies in the production of documents. Counsel emphasized that the bank had failed to provide the Cornerstone promissory note in response to one of the other requests for records. Counsel for Umpqua did not respond. Gunzel sent a second set of requests for production that requested, in part, a copy of all loan documents. On July 11, 2019, Umpqua merely repeated its response to the earlier request for documents. The bank once again failed to produce the promissory note. Umpqua Bank failed to verify its second response to the request for production of documents.

¶ 11 Charles Gunzel scheduled, pursuant to CR 30(b)(6), a corporate deposition of Umpqua Bank. The notice of deposition designated the answers to Gunzel's discovery requests as one of the topics for questioning during the deposition scheduled for December 20, 2019. Umpqua failed to produce a witness for the deposition. The superior court imposed discovery sanctions on Umpqua and its counsel for the nonappearance.

¶ 12 Charles Gunzel moved for summary judgment dismissal of the suit on the basis of the statute of limitations. He argued that, under Oregon law: (1) the statute of limitations on a personal guaranty is independent from any underlying obligation, (2) the six-year statute of limitations accrued on May 28, 2009, when Cornerstone's loan matured without full payment and he thereby became obligated to pay the debt, (3) Cornerstone's periodic payments thereafter did not recommence the running of the statute of limitations against him since he remained in default under his guaranty, (4) the waiver of the statute of limitations defense under his guaranty agreement with Umpqua Bank violated public policy, and (5) the statute of limitations barred Umpqua's suit because the bank sued after May 28, 2015. Note that Gunzel framed the issues as if Cornerstone, not he personally, tendered the late payments.

¶ 13 In his brief in support of his motion for summary judgment, Charles Gunzel wrote: "[t]hereafter, Cornerstone Building Co. continued to make payments through December 16, 2013." CP at 7. Gunzel based this factual assertion on Umpqua's responses to discovery that showed the bank applied payments only to the promissory note and Cornerstone Building's matching loan account number 124790 as opposed to Gunzel's personal guaranty account number 525164.

¶ 14 In response to Charles Gunzel's summary judgment motion, Umpqua Bank contended that both parties agreed no material factual disputes existed. The bank wrote four times, in its opposing memorandum of authorities, that, after Cornerstone Building's default, Gunzel, as president of the corporation, continued to direct Cornerstone to make payments to Umpqua Bank until December 2013. The bank did not cite the record for its factual allegation that Gunzel directed Cornerstone to issue payments. The bank, in its summary judgment motion response, did not suggest that Gunzel personally made a payment.

¶ 15 In opposition to Charles Gunzel's summary judgment motion, Lisa Redcay, assistant vice president and special assets officer in the Special Assets Department of Umpqua Bank, submitted a declaration. She did not claim in the declaration that Charles Gunzel personally tendered a payment to the bank.

¶ 16 As part of its response to Charles Gunzel's summary judgment motion, Umpqua Bank asked the court to "sua sponte" grant it summary judgment against Gunzel. Gunzel asked the court for a postponement of the bank's motion so he could have more time to respond. The trial court denied Charles Gunzel's motion and the bank's sua sponte motion.

¶ 17 Umpqua Bank thereafter moved again for summary judgment. In opposition to the bank's motion, Charles Gunzel submitted a declaration that read, in part:

I did not consent to the extension of the debt evidenced by loan number 3468648478 owed by Cornerstone Building Company to Umpqua Bank beyond the maturity date of May 28, 2009. Cornerstone Building Company continued to make payments on loan number 3468648478 until December of 2013.

CP at 220 (emphasis added).

¶ 18 In response to Charles Gunzel's declaration and brief opposing the bank's motion, Umpqua Bank filed a reply brief. In the reply brief, the bank, in support of its attempt to impose personal liability on Gunzel and without any citation to the record, wrote that: "Mr. Gunzel ... was the actual person responsible for continuing to make payments to Umpqua after the debt became due and owing." CP at 226. The bank later wrote, in its reply brief: "Umpqua merely notes that Gunzel 's payments after the debt became due and owing extended the statute of limitations of the debt [under the guaranty] as this court has already found as a matter of law." CP at 226-27 (emphasis added). The statement lacked any citation to the record to show that Gunzel personally made a payment or that the trial court earlier issued a finding as a matter of law.

¶ 19 The trial court granted Umpqua Bank's summary judgment motion...