Opinion
No. 59097-9-I.
October 15, 2007.
Appeal from a judgment of the Superior Court for Whatcom County, No. 04-2-02926-7, Ira Uhrig, J., entered October 27, 2006.
Affirmed by unpublished opinion per Schindler, A.C.J., concurred in by Agid and Dwyer, JJ.
After David and Patricia Horst (Horst) filed a lawsuit against David and Cristina Finnigan (Finnigan) in 2004 to quiet title to their property, Finnigan filed a third party complaint against the previous owners, Robert and Maureen Jorgenson (Jorgenson), alleging negligent misrepresentation and fraudulent concealment. On summary judgment, the trial court dismissed Finnigan's third party complaint against Jorgenson as barred by the statute of limitations. Because Finnigan knew or should have known the factual basis for his claims against Jorgenson in 1994, we affirm the trial court's dismissal.
FACTS
In 1977, Robert and Maureen Jorgenson (Jorgenson) purchased the lot next to a five-acre parcel of property owned by David and Patricia Horst (Horst). In 1978, Jorgenson built a house near the boundary between his lot and Horst's property. Jorgenson frequently mowed the weeds on the portion of Horst's property located behind his house and placed a moveable shed in the mowed area. On occasion, Horst would use chainsaws and weed eaters to clear the boundary line between the two properties. Horst was aware that Jorgenson was using his property and regularly reminded Jorgenson that he intended to develop the property at some point in the future. According to Jorgenson,
John Horst apparently sold the property to his son David in 2004. To simplify the facts, we refer to both as "Horst."
According to the record, David and his father both informed Jorgenson they planned to develop the property.
[Horst] came through walking in the evenings . . . and we would have a conversation many times about grandchildren but also concluding clearly, reminding me that some day he planned to build on the property. . . . David made it clear to me that he intended to ultimately develop the property behind the house.
In the late 1980's, Jorgenson had a survey done to determine the exact boundary line between the two properties. The surveyors placed a stake with a yellow plastic cap at the southwest corner and Jorgenson drove a one-inch square hollow piece of steel at the northwest corner. Thereafter, Jorgenson planted a row of pyramid trees near the house and just inside the western boundary line with Horst's property to create privacy. The pyramid trees are planted from the corner of Jorgenson's driveway to his house and border the mowed area. The row of trees ends at approximately halfway into the mowed area. After planting the trees, Jorgenson used the gaps between the trees to access the mowed area.
In 1993, Jorgenson listed his house for sale with a real estate agent for Coldwell Banker, Leslie Welden (Welden). Jorgenson testified that he showed Welden the corner stakes that marked the property line between his lot and the Horst property. Working with their real estate agent, Jay Gossage (Gossage), David and Cristina Finnigan (Finnigan) expressed an interest in purchasing the house. Finnigan and Gossage believed the mowed area behind Jorgenson's house was part of the property. Finnigan never requested or obtained a survey. Welden stated that she could not recall much about the transaction, including whether Jorgenson showed her the boundary lines for the property. But Welden remembered that she did not point out the stakes or the boundary lines for the property to either Finnigan or his real estate agent.
On December 15, 1993, Finnigan and Jorgenson entered into a Purchase and Sale Agreement for Jorgenson's house. The legal description of the property in the Purchase and Sale Agreement is "Swansons Subdivision Lot 16."
The parties do not dispute that in 1993 there was no requirement to fill out a Real Property Transfer Disclosure Statement, Form 17. But apparently, at Welden's request, Jorgenson filled out a "Seller's Property Condition Report," Form D-2 (the Form), stating that he was not aware of any boundary disputes that might affect the property. However, there is no evidence in the record that Jorgenson or Welden provided the Form to Finnigan or his real estate agent. The Form does not indicate that Finnigan ever received it and Finnigan never testified that he received the Form. In addition, the Form was not attached to the Purchase and Sale Agreement.
Jorgenson testified that he did not mention any issues concerning the use of Horst's property because he understood that "the property report form was about the property I was selling, not the neighbor's property."
Welden stated that she did not remember whether she gave the property report form to Gossage and Jorgenson did not believe the form was given to Finnigan.
The sale closed in January, 1994. Sometime in early 1994, Jorgenson and Finnigan met at the house. Jorgenson believed the conversation took place before closing. Finnigan said the conversation took place just after closing. Finnigan could not remember exactly what Jorgenson said, but he did remember that Jorgenson told him that some of the yard area "may fall" on the Horst property. Finnigan testified, "[m]y recollection is that Mr. Jorgenson made reference to the backyard area that he had maintained. That his understanding was that some of the property may be on the Horst's property." Jorgenson also told Finnigan that Horst was unhappy with Jorgenson's use of his property and would periodically remind Jorgenson that he knew he was using the property.
After purchasing the property, Finnigan made various improvements to make the mowed area accessible from his house. Finnigan extended the deck and installed steps through openings in the border of pyramid trees. But when Finnigan built a fence around the mowed area in 2003, Horst sent Finnigan a letter telling him that he was encroaching on his property and adversely affecting the potential sale of his land.
On December 14, 2004, Horst filed a lawsuit against Finnigan to quiet title and for trespass. Finnigan answered, asserted several affirmative defenses, and filed a counterclaim against Horst asserting that based on adverse possession, he was entitled to an order quieting title to the mowed area on Horst's property.
On May 15, 2006, Finnigan filed a third party complaint against Jorgenson for negligent misrepresentation and fraudulent concealment. Finnigan alleged Jorgenson negligently misrepresented and fraudulently concealed the fact that the mowed area with the shed on it was not a part of Jorgenson's property. Jorgenson filed a motion for summary judgment dismissal of Finnigan's lawsuit on two grounds: (1) the third party complaint was barred by the statute of limitations, and (2) Finnigan could not establish negligent misrepresentation. The trial court granted Jorgenson's motion for summary judgment and dismissed Finnigan's third party complaint against Jorgenson as barred by the statute of limitations. The trial court awarded Jorgenson $14,250 in attorney fees based on the Purchase and Sale Agreement and entered findings of facts and conclusions of law in support of the attorney fee award.
Analysis
Statute of Limitations
Finnigan contends the trial court erred in granting summary judgment on the statute of limitations. Specifically, Finnigan asserts that the statute of limitations did not accrue until he suffered actual, appreciable harm when Horst sued to quiet title in 2004.
We review summary judgment de novo and engage in the same inquiry as the trial court. Heath v. Uraga, 106 Wn. App. 506, 512, 24 P.3d 413 (2001). Summary judgment is proper if the pleadings, depositions, answers, and admissions, together with the affidavits, show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c). We view the facts and reasonable inferences in a light most favorable to the nonmoving party. Michak v. Transnation Title Ins. Co., 148 Wn.2d 788, 794, 64 P.3d 22 (2003). Summary judgment is appropriate if, in view of all the evidence, reasonable persons could reach only one conclusion. Hansen v. Friend, 118 Wn.2d 476, 485, 824 P.2d 483 (1992).
The statute of limitations for negligent misrepresentation and fraudulent concealment is three years. RCW 4.16.080(2), (4); Sabey v. Howard Johnson Co., 101 Wn. App. 575, 593, 5 P.3d 730 (2000). Because the parties take the position on appeal that the economic loss rule bars Finnigan's negligent misrepresentation claim, under Alejandre v. Bull, 159 Wn.2d 674, 689, 153 P.3d 864 (2007) we only address dismissal of the fraudulent concealment claim.
A cause of action for fraud does not accrue until the aggrieved party discovers the facts constituting the fraud. RCW 4.16.080(4). The nine elements of fraud are: (1) representation of an existing fact; (2) materiality; (3) falsity; (4) knowledge that the statement is false; (5) intent that the listener will act upon the statement; (6) the listener does not know the statement is false; (7) reliance on the truth of the representation; (8) a right to rely on it; and (9) damage. Household Finance Corp. v. Williams, 66 Wn.2d 183, 185, 401 P.2d 876 (1965). To prove fraud, the plaintiff must establish each of these elements by clear, cogent, and convincing evidence. Kirkham v. Smith, 106 Wn. App. 177, 183, 23 P.3d 10 (2001).
A cause of action accrues when the plaintiff knew or should have known all the facts underlying the essential elements of the action. Reichelt v. Johns-Manville Corp., 107 Wn.2d 761, 769, 733 P.2d 530 (1987); 1000 Virginia Ltd. Partnership v. Vertecs Corp., 158 Wn.2d 566, 576, 146 P.3d 423 (2006). In Washington, the general rule is that when a plaintiff is placed on notice by some appreciable harm occasioned by another's wrongful conduct, the plaintiff must make further diligent inquiry to ascertain the scope of the actual harm. Green v. A.P.C., 136 Wn.2d 87, 96, 960 P.2d 912 (1998). It is not necessary for the plaintiff to be aware that he has a legal cause of action. Reichelt, 107 Wn.2d at 769. But an injured plaintiff who reasonably suspects that a specific wrongful act has occurred is on notice that legal action must be taken. Reichelt, 107 Wn.2d at 770. The plaintiff is charged with what a reasonable inquiry would have discovered. Green, 136 Wn.2d at 96.
The plaintiff bears the burden of proving that the facts constituting the claim were not and could not have been discovered by due diligence within the applicable limitations period. G.W. Constr. Corp. v. Professional Serv. Indus. Inc., 70 Wn. App. 360, 367, 853 P.2d 484 (1993). The question of when a party through the exercise of due diligence reasonably should have discovered harm is typically a question of fact. Winbun v. Moore, 143 Wn.2d 206, 213, 18 P.3d 576 (2001). However, when reasonable minds can reach only one conclusion from the evidence, summary judgment is appropriate. Hartley v. State, 103 Wn.2d 768, 775, 698 P.2d 77 (1985).
Finnigan claims that Jorgenson's conduct in mowing the area on Horst's property and placing a shed on the mowed area constituted a representation that the mowed area was part of the backyard and he did not suffer actual harm until Horst sued to quiet title in 2004. But according to Finnigan's description of the conversation with Jorgenson in 1994, Jorgenson pointed out the mowed area and told him that it "may be on the Horst's property."
My best recollection is that he pointed out that there was a green belt, a large area of property behind the home. That he wasn't clear exactly whether the property line was behind his home, and that perhaps some of what he referred to as the yard area in the back of the home may fall on the Horst property. . . .
Again, my best recollection is that somewhere between the edge of the existing deck and the back edge of the grass area, his understanding is where the property line existed, but he didn't indicate specifically where that was.
He did indicate that the owner of the property in the back, and he told me — I don't remember if he even used the — or told me the name, but I understand the senior Mr. Horst would come around annually and point out to Mr. Jorgenson that he was making use of some of his property.
Based on the conversation with Jorgenson, we conclude Finnigan had a duty in 1994 to diligently determine whether the mowed area was part of the property. Reichelt, 107 Wn.2d at 769.
We also conclude that Finnigan's reliance on Gazija v. Nicholas Jerns Co., 86 Wn.2d 215, 219, 543 P.2d 338 (1975) to support his argument is misplaced. In Gazija, the first opportunity the plaintiff had to discover he had an actionable claim was when the insurer refused to indemnify him. Gajiza, at 223. Because the plaintiff had no way of knowing that his insurance policy had been cancelled until he filed an insurance claim, the court held the plaintiff did not suffer harm until the insurer refused to indemnify him. Gazija, at 223.
Unlike in Gazija, Finnigan had the opportunity in 1994 to determine the relevant facts to investigate his claim for fraudulent concealment. The conversation between Jorgenson and Finnigan put Finnigan on notice that the mowed area behind the house may be part of the neighbor's property. Finnigan knew or should have known that at least some of the yard he thought he had purchased from Jorgenson actually belonged to Horst and a reasonable or diligent inquiry would have revealed the actual boundary of the property. Because Finnigan knew or should have known the essential elements of fraud in 1994, Finnigan's third party complaint against Jorgenson filed in 1994 is barred by the statute of limitations.
Finnigan's reliance on Alexander Myers Co. v. Hopke, 88 Wn.2d 449, 455, 565 P.2d 80 (1977), to argue that "a prospective buyer does not have to order an expensive and time consuming survey, but can rely on a seller's representations about the location of the boundary" is also unpersuasive. Alexander Myers holds that a purchaser can justifiably rely on misrepresentations of acreage by the seller if "the boundaries were not reasonably ascertainable and the purchaser could not have determined them without a survey." Alexander Myers, at 455 (emphasis added). Here, the boundaries were reasonably ascertainable and the survey markers indicated the boundary between the two properties.
Finnigan also attempts to distinguish the accrual discovery-rule and from of the statute of limitations. First Maryland Leasecorp v. Rothstein, 72 Wn. App. 278, 282, 864 P.2d 17 (1993). But under RCW 4.16.080(4) the discovery-rule is an exception to the 3-year accrual period. That is, the statute of limitation does not begin to run until the plaintiff discovers, or, by reasonable diligence, would have discovered, the cause of action.").
Attorney Fees
Finnigan does not dispute that the Purchase and Sale Agreement provides, "[i]f Buyer, Seller, Listing or Selling Agent institutes a suit concerning this Agreement, the prevailing party is entitled to court costs and a reasonable attorney's fee. In the event of trial the amount of the attorney's fee shall be fixed by the court." But Finnigan Page 10 contends that the trial court abused its discretion in awarding attorney fees by not discounting the hourly rate or segregating time spent on unsuccessful claims.
A trial court's award of attorney fees is reviewed for abuse of discretion. Scott Fetzer Co. v. Weeks, 122 Wn.2d 141, 147, 859 P.2d 1210 (1993). A trial court abuses its discretion only when its decision is manifestly unreasonable or based on untenable grounds or reasons. Wick v. Clark County, 86 Wn. App. 376, 382, 936 P.2d 1201 (1997). The court must enter findings of facts and conclusions of law in support of an attorney fee award. Mahler v. Szucs, 135 Wn.2d 398, 435, 957 P.2d 632 (1998). Because Finnigan does not assign error to the trial court's findings of fact in support of attorney fees, the findings are verities on appeal. In the Matter of the Estate of Jones, 152 Wn.2d 1, 8, 93 P.3d 147 (2004), 2007 Wn. App. Lexis 2559 (2007) (citing State v. Hill, 123 Wn.2d 641, 644, 870 P.2d 313 (1994)); RAP 10.3(g).
Because the award of attorney fees is separate from the order granting the motion for summary judgment, we reject Finnigan's argument that the trial court's findings of fact and conclusions are not necessary on summary judgment. To the contrary, as stated in Mahler, findings of fact and conclusions of law for an award of attorney fees are mandatory. 135 Wn.2d at 435. Additionally, the case Finnigan relies on, Concerned Coupeville Citizens v. Coupeville, 62 Wn. App. 408, 814 P.2d 243 (1991), does not address findings of fact and conclusions of law regarding attorney fees on summary judgment.
The trial court used the lodestar approach in awarding Jorgenson attorney fees. Bowers v. Transamerica Title Ins. Co., 100 Wn.2d 581, 593, 675 P.2d 193 (1983). In determining the "lodestar," the court multiplies the reasonable hourly rate by the number of hours reasonably expended on the lawsuit. Bowers, at 593. Here, the court found that Jorgenson's lawyers spent 57 hours defending the case and that their hourly rate of $250 was reasonable.
Because Finnigan's attorney only charged $150 an hour, Finnigan argues that the court should have discounted the hourly rate for Jorgenson's attorney. To determine an award of attorney fees, a court considers a variety of factors. RPC 1.5(a); Crest Inc. v. Costco Wholesale Corp., 128 Wn. App. 760, 773, 115 P.3d 349 (2005). While the court can consider the hourly rate of opposing counsel, it is not required to do so. Absher Construction Co. v. Kent School Dist., 79 Wn. App. 841, 847, 916 P.2d 1086 (1995). Here, although the trial court did not specifically make findings about opposing counsel's hourly rate, the findings address the attorneys' experience and reputation, the quality of their representation, the amount customarily charged in Bellingham for similar services, and the result obtained. These findings demonstrate that the trial court considered a variety of factors and did not abuse its discretion in awarding fees based on Jorgenson's attorneys' hourly rate. See Crest, 128 Wn. App. at 774.
Finnigan asserts that Jorgenson failed to segregate time spent on duplicative effort, unsuccessful claims, and other unproductive time. Finnigan relies on ACLU of Washington v. Blaine School Dist. No. 503, 95 Wn. App. 106, 118, 975 P.2d 536 (1999) to argue "[t]he court must limit the lodestar to hours reasonably expended, and should therefore discount hours spent on unsuccessful claims, duplicated effort, or otherwise unproductive time." However, segregation of claims is not required unless attorney fees are only allowed for certain claims. Hume v. Am. Disposal Co., 124 Wn.2d 656, 672-73, 880 P.2d 988 (1994). Here, segregation was not necessary because the trial court dismissed Finnigan's lawsuit against Jorgenson.
Finnigan also argues that "an attorney who requires the assistance of a partner is not entitled to compensation at a premium rate." See ACLU of Washington, 95 Wn. App. at 118. Although two attorneys worked on Jorgenson's case, the attorneys did not work on the case at the same time. Instead, one attorney took over the case from the other.
In addition, Finnigan contends that the court should not have awarded attorney fees for the time spent revising the motion for summary judgment and submitting supplementary declarations. While the trial court did not specifically address this argument in the findings of fact and conclusions of law, the trial court's unchallenged findings demonstrates that, "[t]here are no other lodestar factors which have not already been taken into account, so no further adjustment needs to be made" demonstrates the trial court took Finnigan's argument into account in determining the lodestar. We conclude that the trial court did not abuse its discretion in awarding Jorgenson attorney fees.
CONCLUSION
We affirm the trial court's decision to dismiss Finnigan's third party complaint against Jorgenson as barred by the statute of limitations and the award of attorney fees. Upon further compliance with RAP 18.1, Jorgenson is also entitled to attorney fees on appeal under the provisions of the Purchase and Sale Agreement.
WE CONCUR: