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IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
NONNA VERD, a single woman,
DIVISION ONE
Plaintiff,
No. 69636-0-1
v.
UNPUBLISHED OPINION
ZINAIDA BOSSERDT and VICTOR
BOSSERDT, husband and wife and the
marital community composed thereof;
and KING PASTRY & DELI, INC.,
Appellants,
B. DAVID THOMAS,
Respondent. FILED: March 3, 2014
Dwyer, J. - Under the "discovery rule," a statutory limitation period does
not begin to run on a cause of action until the plaintiff knows, or through the
exercise of due diligence would have reason to know, the facts constituting the
cause of action. Zinaida and Victor Bosserdt assert that the trial court erred in
dismissing their claims against attorney David Thomas under pertinent limitation
periods, arguing that their claims were timely under the discovery rule. Because
the Bosserdts fail to address whether, through the exercise of due diligence, they
could have earlier discovered the facts constituting their causes of action, we
affirm.
No. 69636-0-1-1/2
In 2004, attorney David Thomas assisted Nonna Verd with the formation
of her business, King Pastry & Deli, Inc., and became its registered agent.
In 2006, Thomas drafted a stock purchase agreement for the sale of
Verd's interest in King Pastry to Zinaida and Victor Bosserdt.
On July 17, 2007, the Bosserdts, through their attorney, sent a letter to the
Bellevue Police Department and the Federal Bureau of Investigation alleging that
Verd and her sister had conducted an extensive loan scam involving their
businesses since at least 2003. The letter alleged that when the sisters borrow
money, they "never disclose the real situation which is that they systematically
borrow money from their victims, their business and they themselves are heavily
in debt, with countless liens and judgments against them." The letter listed the
names, telephone numbers, and loan amounts for 10 victims and nearly 20 other
targets or victims who were repaid. The letter noted that one victim sued Verd in
2003, but Verd did not appear and was arrested in 2004. The victim eventually
obtained a default judgment in 2005. Another victim sued Verd in 2006 for fraud,
misrepresentation, and other causes of action. The Bosserdts attached copies of
promissory notes, checks, and financial and court documents.
On September 6, 2007, Nonna Verd sued the Bosserdts and King Pastry
for damages stemming from the Bosserdts' alleged breach offiduciary duties.
On November 16, 2007, the Bosserdts filed a counterclaim against Verd
for breach of contract, fraud, intentional misrepresentation, Consumer Protection
No. 69636-0-1-1/3
Act violations, breach of fiduciary duty, and violations of securities laws. The
complaint alleged in part that Verd had not fully disclosed King Pastry's debts
prior to executing the stock purchase agreement.
In August, 2008, the Department of Financial Institutions (DFI) issued a
"Statement of Charges and Notice of Intent to Enter Order to Cease and
Desist" to Verd and King Pastry. DFI alleged that between 2004 and 2006, Verd
sold investments in the form of promissory notes, shares of stock, and
investment contracts to eight investors for a total of over $800,000. The
Statement of Charges concluded with allegations that Verd and King Pastry
violated the registration and fraud provisions of the Securities Act of Washington,
chapter 21.20 RCW, and with a notice of intent to order them to cease and desist
from further violations.1
On May 14, 2010, the Bosserdts filed a motion to add Thomas to their
counterclaims as a third-party defendant. The court eventually granted both
motions.
On July 30, 2010, the Bosserdts filed and served a third party complaint
against Thomas. The complaint alleged that in October 2006, the Bosserdts
learned that King Pastry was heavily in debt and owed $200,000 to Evgeniya
Vaysberg, a prior investor. The complaint further alleged that this loan and
others were not disclosed by Verd or Thomas, that Verd "had a long history of
1 On November 24, 2008, the Bosserdts filed a document entitled "Notice of Bankruptcy
Filing" in their case against Verd. The document stated in part: "All proceedings herein are
stayed pursuant to the provisions of 11 USC § 362." The Bosserdts do not argue on appeal that
their bankruptcy tolled the limitation periods on their various causes of action.
No. 69636-0-1-1/4
borrowing money from people without any intention or ability to pay the money
back," and that Thomas, "acting for [Verd,] knew or should have known that [she]
had fraudulently misrepresented the facts of the stock purchase transaction . ..
knowing the same to be false." The complaint set forth causes of action against
Verd and Thomas for fraud, negligent misrepresentation, violation of the
Securities Act of Washington, violation of the Securities Exchange Act of 1934,
15 U.S.C. § 78j(b), and violation of the Consumer Protection Act, chapter 19.86
RCW.
In answers to interrogatories, the Bosserdts stated that their claims
against Thomas were based on the following:
[W]e believe that... Mr. Thomas . . . knew or should have
known about the transactions that involved the purchase and sale
of King Pastry . . . common stock and loan transactions, otherwise
he could not have adequately advised Nonna Verd. [Interrogatory
No. 2.]
Mr. Thomas also knew or should have known about the
Vaysberg transaction because there were discussions about an
action as far back as June 2006, four months prior to this
transaction. . . .
Mr. Thomas knew or should have known about the UCC
filing of lien on King Pastry & Deli, Inc. by Kautsman Construction
Inc. because it was filed on or about 5/1/2005, prior to the drafting
of our agreement. . . .
Mr. Thomas knew or should have known that King Pastry &
Deli, Inc. had a Washington State Tax Warrant filed against them in
2005 because he was the registered agent of King Pastry & Deli,
Inc. . . . [Interrogatory No. 1.]
Zinaida Bosserdt stated in her deposition that she learned of the
Kautsman Construction lien by July 16, 2007.
No. 69636-0-1-1/5
In October, 2011, Thomas moved to dismiss the third-party complaint,
arguing that the Bosserdts' causes of action were time-barred. He argued that all
of the claims were subject to three-year statutes of limitation, that all were based
on his alleged failure to reveal the Vaysberg loan and a construction lien in the
stock purchase agreement, and that the Bosserdts were aware of those
omissions no later than July 17, 2007. Because the Bosserdts did not file their
third-party complaint until July 30, 2010, he asserted, their claims were time-
barred.
The Bosserdts countered that their causes of action did not accrue, and
the relevant limitation periods did not begin to run, until DFI issued its Statement
of Charges in August 2008. According to the Bosserdts, they did not know until
they read the Statement of Charges that Verd's agents, including Thomas, were
potentially liable.
The court granted summary judgment dismissing all claims against
Thomas.2 The Bosserdts appeal.
II
The sole issue on appeal is whether the superior court erred in granting
summary judgment. We review that decision de novo, engaging in the same
inquiry as the trial court. Dillon v. Seattle Deposition Reporters, LLC, Wn.
App. , 316 P.3d 1119,1120(2014). Summary judgment is proper if the
pleadings, affidavits, depositions, and admissions on file demonstrate thatthere
2Following summary judgment for the Bosserdts on their counterclaims against Verd, the
court held a trial on damages and awarded the Bosserdts $684,134.36 in damages.
No. 69636-0-1-1/6
is no genuine issue of material fact and that the moving party is entitled to
summary judgment as a matter of law. CR 56(c); Dillon, 316 P.3d at fl 20. All
reasonable inferences from the evidence must be drawn in favor of the
nonmoving party. Lamon v. McDonnell Douglas Corp., 91 Wn.2d 345, 349, 588
P.2d 1346 (1979).
The Bosserdts contend summary judgment was improper because their
claims were timely filed under the discovery rule. Under that rule, "a cause of
action does not accrue—and as a result the statute of limitations does not begin
to run—until the plaintiff knows, or has reason to know, the factual basis for the
cause of action." Bowles v. Wash. Dep't of Ret. Svs., 121 Wn.2d 52, 79-80, 847
P.2d 440 (1993). The discovery rule requires a plaintiff to exercise reasonable
diligence in discovering the basis for their cause of action, Reichelt v. Johns-
Manville Corp., 107 Wn.2d 761, 772, 733 P.2d 530 (1987), and a '"plaintiff is
charged with what a reasonable inquiry would have discovered.'" 1000Virginia
Ltd. P'shipv. Vertecs Corp., 158 Wn.2d 566, 581, 146 P.3d 423 (2006) (quoting
Green v.A.P.C, 136 Wn.2d 87, 96, 960 P.2d 912 (1998)). We may decide the
applicability of the discovery rule as a matter of law where the facts are subject to
only one reasonable interpretation. Allen v. State, 118 Wn.2d 753, 760, 826 P.2d
200(1992).
The Bosserdts principal argument on appeal is that they "did not discover
[Thomas'] possible involvement in this case until afterthe [DFI] entered their
Statement of Charges" in August 2008. Therefore, they conclude, the statute of
No. 69636-0-1-1/7
limitations did not commence until August 2008 and their July 30, 2010 complaint
against Thomas was not time-barred. This argument is flawed in several
respects.
First, in his briefing below and before this court, Thomas argued, and the
Bosserdts did not dispute, that the party invoking the discovery rule bears the
burden of showing that the facts constituting their claims "were not and could not
have been discovered by due diligence within the applicable limitations period."
Clare v. Saberhagen Holdings, Inc., 129 Wn. App. 599, 603, 123 P.3d 465 (2005)
(emphasis added) (citing G.W. Constr. Corp. v. Prof'l Serv. Indus. Inc., 70 Wn.
App. 360, 367, 853 P.2d 484 (1993)): accord Martin v. Dematic, Wn. App. _ ,
315 P.3d 1126 (2013). The Bosserdts opening brieffocuses solely on when they
allegedly discovered the facts supporting their claims. The brief says nothing
about why the facts known to them, together with a reasonable inquiry, could not
have provided all the facts necessary for them to assert their claims prior to July
30, 2007.3 To the extent the Bosserdts raise such arguments for the first time in
their reply brief, the arguments come too late. Cowiche Canyon Conservancy v.
Boslev, 118 Wn.2d 801, 809, 828 P.2d 549 (1992) (argument raised for the first
3It is undisputed that Thomas was the registered agent for King Pastry and Verd's
counsel, that he drafted the King Pastry stock sale agreement for Verd, that he did not include the
Vaysberg loan and the Kautsman Construction lien in the agreement, and that the Bosserdts
knewof that loan and lien no later than July 17, 2007. In addition, they knew no later than July
17, 2007 that Verd had been conducting an extensive, ongoing loan scam involving King Pastry
and other businesses, and that the businesses were "heavily in debt, with countless liens and
judgments against them.. . ." The fact that they forwarded the latter information to police and the
FBI on July 17, 2007, indicates thatthey believed by that date thatVerd's activities violated both
state and federal laws.
No. 69636-0-1-1/8
time in reply brief need not be considered). The Bosserdts thus fail to
demonstrate any basis for appellate relief.
Second, the Bosserdts' contention that the DFI Statement of Charges
provided new information about the liability of Verd's agents is contrary to the
record. The Statement of Charges nowhere mentions Thomas, and its only
reference to Verd's "agents" is as follows:
Pursuant to RCW 21.20.390 and based on the above
Tentative Findings of Fact and Conclusions of Law, the Securities
Administrator intends to order that Respondents, King Pastry &
Deli, Inc. and Nonna Verd, and their agents and employees, each
cease and desist from violations of RCW 21.20.010.
(Emphasis added.) As Thomas points out, this reference to agents pertains only
to the future actions of King Pastry's and Verd's agents. The DFI neither
charged, nor made a finding against, any agent. The DFI charges were only
against "King Pastry &Deli, Inc. and Nonna Verd" and sought "entry of an
order. . . against each to cease and desist from such violations."
Third, contrary to the Bosserdts' assertions, the Statement of Charges did
not provide any other materially significant information. The Bosserdts claim the
Statement of Charges "outlines a scheme offraud . . . whereby many victims lost
hundreds of thousands of dollars through the use of stock transaction and
promissory notes, fraud and promises of repayment." But this is essentially the
same information that the Bosserdts gave to the police and FBI on July 17, 2007.
8-
No. 69636-0-1-1/9
The Bosserdts have failed to carry their burden of demonstrating that the
facts constituting their state law claims could not have been discovered through
the exercise of due diligence prior to July 30, 2007.
For the same reasons, we reject the Bosserdts' argument that their claim
for violations of federal securities laws is not time-barred. The limitation period
for such claims is "the earlier of - (1) 2 years after the discovery of the facts
constituting the violation; (2) or 5 years after such violation." 28 U.S.C. §
1658(b). The Bosserdts concede that this limitation period, like the others,
begins to run when the plaintiff has discovered, or in the exercise of reasonable
diligence could have discovered, the facts that constitute the violations. See
Merck & Co. v. Reynolds. 559 U.S. 633, 130 S. Ct. 1784, 176 L Ed. 2d 582
(2010). As discussed above, the Bosserdts fail to demonstrate that they could
not have discovered all the facts necessary to assert their causes of action,
including their federal securities claim, prior to July 30, 2007.
Finally, the Bosserdts contend that the superior court erred in failing to
enter findings of fact and conclusions of law. However, findings and conclusions
are not only unnecessary on summary judgment, CR 52(a)(5)(B), but are
superfluous on review. Donald v. City of Vancouver. 43 Wn. App. 880, 883, 719
P.2d 966 (1986).
For the first time in their reply brief, the Bosserdts advance a number of
additional challenges to the superior court's summary judgment ruling. We need
not consider these arguments. Cowiche Canyon. 118 Wn.2d at 809.
No. 69636-0-1-1/10
Affirmed.
We concur:
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