Filed
Washington State
Court of Appeals
Division Two
December 11, 2018
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
SHARON L. HARTZELL, a single woman; No. 51391-9-II
JUDY L. HARTZELL, a single woman, in her
capacity as the Attorney-in-Fact for Sharon L.
Hartzell,
UNPUBLISHED OPINION
Appellants,
v.
DOROTHY M. THOMAS, a single woman,
Respondent.
BJORGEN, J. — Sharon L. Hartzell, and Judy Hartzell, in her capacity as the attorney-in-
fact of Sharon L. Hartzell,1 brought suit against Dorothy Thomas for conversion and fraud
relating to transactions concerning the family home. The Hartzells appeal the superior court’s
order granting summary judgment in Thomas’ favor and dismissing the Hartzells’ complaint.
The Hartzells argue that the superior court erred when it granted summary judgment
based on the three-year statute of limitations for conversion and fraud because their causes of
1
We refer to Sharon or Judy by their first name when discussing them individually and as the
Hartzells when discussing them collectively in their capacity as the appellants in this matter.
No. 51391-9-II
action did not accrue until they discovered facts constituting the fraud. In addition, the Hartzells
assign error to the superior court’s refusal to apply the doctrine of equitable tolling.
We reverse and remand for further proceedings.
FACTS
A. Substantive Facts
Sharon is the mother of eight children, including Judy and Dorothy.
In 1996, Sharon owned a home located in Port Townsend, in which she had resided since
1971.2 In the early summer of 1996, Sharon recognized that her home needed a variety of
improvements. She contacted her nephew, a contractor, who estimated that the home
improvements would cost about $30,000. Unable to obtain financing on her own, Sharon and
Dorothy agreed that Dorothy would cosign a loan so that Sharon could make the improvements
to her home.
On July 24, 1996, Sharon executed a quitclaim deed, giving her daughter, Dorothy, a 50
percent interest in the home, as a tenant in common.3 The quitclaim deed was notarized and
recorded by the county auditor.
On July 30, Dorothy cosigned a loan for Sharon with a principal amount of $62,000. The
loan settlement statement indicated that Sharon’s outstanding mortgage obligation prior to
obtaining the loan was $2,981.83.
2
Sharon and Judy still reside at this property.
3
There are no facts on the record indicating that Sharon was incompetent at the time she
executed the quitclaim deed, although there are facts on the record indicating that she was
declared legally blind around 1990.
2
No. 51391-9-II
On January 16, 2004, Sharon signed another quitclaim deed, which granted Sharon’s
remaining 50 percent interest in the home to Dorothy, as a gift from mother to daughter. The
quitclaim deed was notarized and recorded. After this conveyance, Sharon no longer had record
ownership of the home.
As record owner of the home, Dorothy has since obtained multiple deeds of trust in her
name borrowing against the home’s equity.
On May 18, 2015, Sharon appointed Dorothy and Judy as her attorneys-in-fact. On
December 21, Sharon revoked Dorothy’s appointment and appointed Judy as her sole attorney-
in-fact.
B. Conflicting Declarations and Deposition Testimony
In her declaration supporting summary judgment, Dorothy stated,
In 1996, at the age of 59, my mother asked me to assist her in re-financing her home
so that she could do some improvements and repairs. I agreed to help her and we
sought professional advice from a bank loan officer. We were, at that time,
informed that the best way to accomplish our goals included my being on title with
my mother. It was based upon this advice that my mother granted me a 50% interest
in the property. We thereafter obtained the loan and it was used to remodel and
make repairs on the house, as well as to help each of us financially. I made all
payments on the loan.
Clerk’s Papers (CP) at 24. Dorothy continued:
In 2004, at the age of 67, my mother again felt she needed a loan to help pay
expenses she had incurred since 1996 and to pay for more repairs and maintenance
on her aging home. She asked me again to help her obtain this financing. We again
sought professional assistance and obtained a loan. In the process of doing so we
were told that my mother’s income status was not sufficient upon which to borrow
the money we sought. As a result of this information it was decided that I alone
would borrow the money. Based upon the advice we were given, it was also
decided that I should be the sole owner of the property. There was not then, and
never has been, a question but that my mother could continue to live in the home
for her lifetime[.] The mortgage loan proceeds were used in large part for
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No. 51391-9-II
maintenance and repairs at my mother[’s] request and I have been solely
responsible for repayment of the loan.
CP at 24. Dorothy also declared that,
Each time my mother and I applied for and got mortgage loans, and consulted with
loan professionals, my mother was present. To the best of my knowledge and
understanding, she was as fully informed and knowledgeable about the processes
we were involved in for obtaining the loans as I was based upon the information
provided to us by the loan professionals. My mother signed loan documents in the
presence of loan professionals.
CP at 24.
When asked about the 1996 quitclaim deed giving Dorothy one-half interest in the home,
Sharon stated in her deposition that she had “no clue” what that document meant. CP at 87. She
stated,
I mean, you could read that document to me until the cows come home, and I didn’t
comprehend it. But I did not know I was giving her an interest, because I just
thought she [Dorothy] was going to be a cosigner just to help me get the loan, but
I was paying her back.
CP at 87-88. The deposition continued:
Q. So you understood she was going to cosign for the loan?
A. Yes.
Q. And you also signed the loan?
A. Yes.
Q. But was it your understanding that you were going to give her a one-half interest
in the property?
A. No, no. Because she knew from the time she was approximately 12 years old
when we moved into the house, that if something happened that house was to be
kept in all eight, for all eight kids, not just one.
CP at 88. When asked about the 2004 quitclaim deed, which granted Sharon’s remaining interest
in the home to Dorothy, Sharon stated,
I recall it, but I don’t remember – I don’t – I didn’t realize I was giving her the
home. Because she called me up and said that the loan company wanted her name
4
No. 51391-9-II
to be first on the loan. And she said we’re going to swap places, it’s just on
paper, it’s not legal.
CP at 91-92. The colloquy continued:
Q. So you never had any intention, then, to give her [Dorothy] the entire property—
A. No.
Q. –in 2004?
A. Heavens, no.
CP at 92-93.
When Sharon was asked why she would sign the documents without having someone else
look at them, she stated, “I had somebody probably read them to me.” CP at 97.
C. Discovery of Will
In Judy’s declaration, she declared,
In late 2015, Shirley4 was visiting with me and Sharon and she asked if
Sharon . . . had a Will. Sharon said that she had signed a Will that Dorothy had
prepared for her, and we looked around the house to help her find it. Shirley and I
had never previously known anything about the existence of this Will. We then
read the Will and were astounded to discover that the Will left 100% of Sharon’s
Estate to Dorothy! Sharon was just as surprised as Shirley and me, and said that
she had never intended to leave her estate to anyone other than all eight of her
children.
The discovery of the Will prompted me to delve further into Sharon’s
financial affairs and Dorothy’s activities. I checked with the King County
Assessor’s office and found that Dorothy was now the record owner of 100% of the
Property, by virtue of the 1996 and 2004 deeds.
CP at 41. Judy declared that December 2015 was the first time that Sharon, herself, and the
other siblings had actual knowledge that Sharon had signed quitclaim deeds granting the home to
Dorothy.
4
Shirley Page is another of Sharon’s daughters.
5
No. 51391-9-II
D. Procedural Facts
On March 21, 2016, the Hartzells filed a complaint against Dorothy for conversion and
fraud. The complaint alleged, without specificity, that through deception, fraud, and/or undue
influence, Dorothy persuaded Sharon to sign two quitclaim deeds, which together granted
Dorothy sole ownership of the home. It alleged that due to her blindness, Sharon did not
understand what she was signing. It further alleged that Sharon never intended or understood
that she was granting her home to Dorothy. The complaint also alleged that after the home was
in her name, Dorothy obtained various deeds of trust that borrowed against the property’s equity.
Finally, it alleged that Sharon, Judy, and her other siblings only recently discovered the grant of
the home to Dorothy.
In her answer to the complaint, Dorothy admitted to cosigning loans for Sharon, but
denied using any deception, fraud and/or undue influence to persuade Sharon to execute the
quitclaim deeds. Dorothy presented various affirmative defenses and asserted, among other
things, that the Hartzells’ claim was barred by the applicable statute of limitations.
Dorothy moved for summary judgment. The motion argued (1) the statute of limitations
had run, (2) the Hartzells had failed to raise a genuine issue of material fact regarding the
exception to the statute of limitations based on delayed discovery, and (3) the Hartzells had
failed to raise a genuine issue of material fact supporting their conversion and fraud claims.
In their opposition to summary judgment, the Hartzells argued that the applicable statute
of limitations did not bar their claims because of the discovery rule. The Hartzells contended
that Sharon’s disability prevented her from understanding the fraud, which had been perpetrated
6
No. 51391-9-II
on her. In addition, the Hartzells claimed that the trial court should apply the doctrine of
equitable tolling based on the circumstances of their case.
The superior court granted summary judgment in Dorothy’s favor and dismissed the
Hartzells’ complaint. Aside from its list of material considered, the superior court’s order states
simply, “Defendant Thomas’s motion for summary judgment is GRANTED.” CP at 127-28.
The court’s basis for its decision may be seen in the two appellate decisions listed among the
documents it considered: Strong v. Clark, 56 Wn.2d 230, 352 P.2d 183 (1960) and Stueckle v.
Sceva Steel Bldgs., Inc., 1 Wn. App. 391, 461 P.2d 555 (1969) and their progeny. In Strong, our
Supreme Court held, among other matters,
When the facts upon which the fraud is predicated are contained in a written
instrument which is placed on the public record, there is constructive notice of its
contents, and the statute of limitations begins to run at the date of the recording of
the instrument.
56 Wn.2d at 232. In Stueckle, Division Three of our court noted, “The statute of limitations may
be tolled by the concealment of material facts, misrepresentations, or a promise to pay in the
future.” 1 Wn. App. at 393.
Because these cases are listed in the order granting summary judgment, we read the order
as deciding the statute of limitations and equitable tolling issues, but not reaching the merits of
whether the Hartzells had failed to state a claim on which relief can be granted for conversion
and fraud.
The Hartzells appeal.
7
No. 51391-9-II
ANALYSIS
I. SUMMARY JUDGMENT
The Hartzells argue that the superior court erred when it granted summary judgment
based on the statute of limitations. We agree that the superior court erred.
A. Standard of Review
We review a trial court’s order granting summary judgment de novo. Lyons v. U.S. Bank
Nat’l Ass’n, 181 Wn.2d 775, 783, 336 P.3d 1142 (2014). We view the evidence in the light most
favorable to the nonmoving party and draw all reasonable inferences in that party’s favor. Lakey
v. Puget Sound Energy, Inc., 176 Wn.2d 909, 922, 296 P.3d 860 (2013). Summary judgment is
appropriate where there is no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. CR 56(c).
B. Question of Fact Regarding Discovery of Alleged Conversion and Fraud
The trial court is charged with applying the appropriate statute of limitations based on the
gravamen of the complaint. Aberdeen Fed. Sav. & Loan Ass’n v. Hanson, 58 Wn. App. 773,
776, 794 P.2d 1322 (1990).
Conversion claims are subject to a three-year statute of limitations. RCW 4.16.080(2);
Crisman v. Crisman, 85 Wn. App. 15, 19, 931 P.2d 163 (1997). In some cases, there can be a
delay between an alleged injury and the plaintiff’s discovery of it. Id. at 20. When the delay is
not caused by the plaintiff sleeping on his rights, the discovery rule may apply to conversion
claims. Id. at 20-22.
Fraud claims are also subject to a three-year statute of limitations, and “the cause of
action in such case [is] not to be deemed to have accrued until the discovery by the aggrieved
8
No. 51391-9-II
party of the facts constituting the fraud.” RCW 4.16.080(4); see also Aberdeen, 58 Wn. App. at
776 (holding the three-year statute of limitations applies to an action to set aside a deed based on
an allegation of fraud); Strong, 56 Wn.2d at 232.
The discovery rule tolls the statute of limitations to the date the plaintiff knows or should
have known—through the exercise of due diligence—all the facts necessary to establish a legal
claim. Crisman, 85 Wn. App. at 20. In the context of this case, the discovery rule applies
“where the defendant fraudulently conceals a material fact from the plaintiff and thereby
deprives the plaintiff of the knowledge of accrual of the cause of action.” Id.
Whether an act of fraud could have been discovered is a question of fact. Aberdeen, 58
Wn. App. at 776. Actual knowledge of the fraud will be inferred if the aggrieved party, by the
exercise of due diligence, could have discovered it. Strong, 56 Wn.2d at 232. One is charged
with constructive notice if the fraud could have been discovered by examining the record and if
“‘ordinary prudence and business judgment’” required examination of the record. Aberdeen, 58
Wn. App. at 777 (quoting Irwin v. Holbrook, 32 Wash. 349, 357, 73 P. 360 (1903)).
The Hartzells’ complaint for conversion alleged that Dorothy misled Sharon as to the
nature of the quitclaim deeds through fraud, misrepresentation, and/or undue influence. The
evidence Sharon presented to the superior court demonstrated that the claim depended entirely
on whether the quitclaim deeds were acquired by fraud, misrepresentation, and/or undue
influence. The Hartzells did not present the superior court with any other alternative basis to
support their action for conversion and fraud.
Thus, the three-year statute of limitations, RCW 4.16.080(2), (4), applies to the Hartzells’
claims. The quitclaim deeds were signed, notarized, and recorded in 1996 and 2004,
9
No. 51391-9-II
respectively, and would generally work to bar her lawsuit, which was filed well beyond the
three-year statute of limitations. The Hartzells, however, assert that even if the three-year statute
of limitation applies to their claims, their claims were timely because the limitations period
began to run only on their discovery of the alleged fraud.
Turning to the record, on the one hand it is undisputed that Dorothy is Sharon’s daughter
and that Sharon trusted Dorothy to assist her in obtaining various loans. Sharon claims she did
not know she was signing the home away and that it was not her intent to do so. The record
shows that Dorothy told Sharon, “[W]e’re going to swap places, it’s just on paper,” and that “it
was [Dorothy’s] understanding . . . [that] the home was still [hers].” Further, there was an
absence of any red flags for Sharon.
On the other hand, it is undisputed that Sharon signed the quitclaim deeds, the deeds
contained the legal description of the property, and the deeds were notarized and recorded on the
public record in 1996 and 2004, respectively. Although Sharon claims she did not know or
understand the contents of what she signed, she admits that the quitclaim deeds were “probably”
read to her in the presence of loan officers and notary publics. CP at 97. Further, there are no
facts on the record to support that Sharon was incompetent when she signed the quitclaim deeds,
and the Hartzells have not claimed that she was.
The record thus shows that there are genuine issues of material fact as to whether an act
of fraud could have been discovered, whether Sharon had actual or constructive knowledge of
the alleged fraud, and whether Sharon exercised due diligence and “ordinary prudence and
business judgment” regarding discovery of the alleged fraud. Therefore, under CR 56(c) the
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No. 51391-9-II
superior court erred when it granted summary judgment in Dorothy’s favor based on the
applicable statute of limitations.5
CONCLUSION
We reverse and remand for further proceedings consistent with this opinion.
A majority of the panel having determined that this opinion will not be printed in the
Washington Appellate Reports, but will be filed for public record in accordance with RCW
2.06.040, it is so ordered.
Bjorgen, J.
We concur:
Lee, A.C.J.
Melnick, J.
5
Because we hold the superior court erred when it granted summary judgment, we need not
reach the issue of equitable tolling.
11
Sharon And Judy Hartzell, V Dorothy M. Thomas
Combined Opinion