847 F. Supp. 2d 1273

Herbert R. PUTZ, et al., Plaintiffs, v. Michael H. GOLDEN, et al., Defendants.

No. C10-0741JLR.

United States District Court, W.D. Washington, at Seattle.

Jan. 24, 2012.

*1275Patrick T. Jordan, Steven W. Fogg, Corr Cronin Michelson Baumgardner & Preece, Seattle, WA, for Plaintiffs.

John R. Kitzmann, Davidson & Kitzmann, Charlottesville, VA, Howard I. Hall, Wolfstone, Panchot & Bloch, Seattle, WA, for Defendants.

ORDER DENYING MOTION FOR SUMMARY JUDGMENT

JAMES L. ROBART, District Judge.

I. INTRODUCTION

Before the court is Defendants Michael H. Golden and Suzanne C. Golden’s (“the Goldens”) motion for summary judgment (Dkt. #45). Having considered the motion, the parties’ submissions filed in support and opposition thereto, the applicable law, and being fully advised, the court DENIES the motion.1

*1276II. BACKGROUND

Defendant Societe Civile Immobiliere Paepaepupure (“SCIP”) is a resort, which was originally developed in the 1970’s and consists of 16 bungalows in Paepaepupure, Bora Bora in French Polynesia. (See Hall Decl. (Dkt. # 49) Ex. 1 (M. Golden Dep.) at 13:15-14:13.) SCIP is governed by statutes, which are similar to articles of incorporation. (Id. Ex. 6.) Management of SCIP is placed in the hands of a gerant, which is the French term for manager. (Id. Ex. 6 at 25-31.) In addition to the gerant, there is a “Supervisory Committee” made up of three SCIP shareholders, or “associates.” (Id. Ex. 6 at 35-36.) The members of the Supervisory Committee sometimes refer to themselves informally as “the Board.” (See, e.g., id. Ex. 1 (M. Golden Dep.) at 20:15-22:18.)

In 1977, the Goldens purchased 19 SCIP shares (## 223-241), representing the right to use Bungalow # 12 within the SCIP development. (See Hall Decl. Ex. 1 at 13:15-14:13.) As part of the transaction, the Goldens received a formal “cession de parts, ” which provided evidence of the Goldens’ ownership of SCIP shares## 223-241. (Id. Ex. 4.) After purchasing the rights to use Bungalow # 12, Mr. Golden became a member of SCIP’s Supervisory Committee. (Jordan Decl. (Dkt. #51) Ex. 1 (M. Golden Dep.) at 20:23-21:19.) Mr. Golden served in this capacity from approximately 1980 through the sale of his shares in 1987. (Id. Ex. 1 at 21:20-25.)

In 1987, the Goldens and Plaintiff Herbert R. Putz executed an agreement and addendum (“the 1987 Agreement”) for the sale of the 19 shares representing Bungalow #12. (See Hall Decl. Ex. 5.) The Goldens agreed to sell their shares to Dr. Putz “and/or [his] assigns.” (Id.) The 1987 Agreement consists of a two-page real estate purchase and sale agreement, dated February 23, 1987, and a one-page addendum signed by Dr. Putz on March 5, 1987, and by the Goldens on March 29, 1987. (Id.) Dr. Putz agreed to pay $117,500.00 for the SCIP shares representing Bungalow # 12. (Id. Ex. 5 at 1.) The addendum included a paragraph, stating: “Sellers [the Goldens] will arrange that the Board of Directors will approve the transfer of the stocks as required by the By-Laws of the Corporation.” (Id. Ex. 5 at 3.)

In order to limit his personal liability, Dr. Putz decided to form a New York corporation named Panonia Realty Corporation (“Panonia”) to be the owner of the SCIP shares. (Id. Ex. 2 (Putz Dep.) at 70:13-21.) Panonia is a plaintiff, along with Dr. Putz, in this litigation. In order to complete the transfer, Dr. Putz incorporated Panonia and sent Panonia’s corporate documents to the Goldens. (Jordan Decl. Ex. 6.) The Goldens signed Panonia’s corporate documents, and then transferred their SCIP shares to Panonia. (See generally Hall Decl. Ex. 2 (Putz Dep.) at 83:4-85:5.) At the time that the Goldens transferred the SCIP shares to Panonia, the Goldens were Panonia’s only officers, directors, and shareholders. (Jordan Decl. Ex. 1 (M. Golden Dep.) at 102:25-103:11.) The Goldens then transferred or assigned all of their Panonia shares to Dr. Putz. (Id.) As a result, Dr. Putz became the sole owner of Panonia, which in turn owned the SCIP shares. (Id.) Dr. Putz paid the Goldens $117,500.00 as required by the 1987 Agreement. (Id. Ex. 1 at 125:2-3; 126:4-7.)

For nearly twenty years, all of the parties to the transaction believed that the 19 SCIP shares had been properly transferred from the Goldens to Plaintiffs. Indeed, Dr. Putz enjoyed the use of Bungalow # 12, both personally and as a vacation rental property, until 2007. (Hall Decl. Ex. 2 (Putz Dep.) at 86:19-87:4.) He paid SCIP maintenance fees during this period. *1277 (Id. Ex. 2 at 99:16-25; 86:19-25.) He even served as SCIP’s gerant from May 1993 through September 2002. (See id. Ex. 2 at 25:4-29:19.)

Plaintiffs now assert, however, that the Goldens latently breached the 1987 Agreement in a manner that did not become apparent for nearly twenty years. (See Resp. (Dkt. #50) at 7-11.) Specifically, Dr. Putz and Panonia allege that the Gold-ens failed to transfer the 19 SCIP shares in accordance with French Polynesian law and also breached the provision of the 1987 Agreement which required them to “arrange that the Board of Directors will approve the transfer of the stocks as required by the By-Laws of the Corporation.” (Id. at 5 (citing Hall Decl. Ex. 5).) There are myriad factual disputes with regard to all of the Plaintiffs’ theories concerning breach.

First, Dr. Putz and Panonia allege that the Goldens failed to contact the appropriate persons at SCIP to obtain the required approval from SCIP’s Supervisory Committee. (See Resp. at 5.) Plaintiffs assert that the Goldens sent Panonia’s corporate documents only to Norton Brown, whose firm functioned as accountants for SCIP. (Jordan Decl. Ex. 1 (M. Golden Dep.) at 36:6-9 & Ex. 1 (M. Golden Dep. II) at 8:22-9:1.) Plaintiffs argue that Mr. Brown could not have been a member of the Supervisory Committee because he was not a SCIP shareholder. (See Resp. at 5 (citing Jordan Decl. Ex. 9 (March 31, 1986 list of SCIP bungalow owners which does not include Mr. Brown)).) By notifying only Mr. Brown, Plaintiffs argue that the Goldens failed to obtain the required approval of the SCIP board or Supervisory Committee. (See id.)

The Goldens respond that Mr. Brown served as the gerant or manager of SCIP, and that in this role he had the authority to approve sales of shares to a third party. (Mot. at 4, 6-7 (citing Hall Decl. Ex. 6 at 11-12; Ex. 1 (M. Golden Dep.) at 36:21-37:2.) There is also testimony from Mr. Golden indicating that Mr. Brown served on SCIP’s board or Supervisory Committee, as well. (Id. Ex. 1 at 29:2-17.) Further, Mr. Golden sent a letter addressed to “Board of Directors Societe Paepaepupure” describing the pending sale of Bungalow # 12 to Dr. Putz, although the letter does not mention Panonia’s involvement in the sale. (Id. Ex. 7.) The face of the letter indicates that Mr. Golden, sent it to Ms. Rosette Valente, who was another SCIP board member, and to Mr. Brown, and that neither of these individuals ever objected to the sale. (Id. Ex. 1 at 62:9-17, Ex. 7.) Finally, SCIP’s lawyer, Claude Girard, sent a letter to Dr. Putz confirming that both he and Panonia had “the right of occupancy as an ownership of bungalow n* 12.” (Id. Ex. 9.) Thus, the Goldens assert, based on this evidence, that SCIP effectively approved the sale, and that therefore the Goldens did not breach the 1987 Agreement. (Mot. at 16-17.)

Second, Plaintiffs assert that the Gold-ens breached the 1987 Agreement by failing to follow SCIP’s Article 13 requirements for the transfer of shares. (Resp. at 5-6 (citing Hall Decl. Ex. 6 at 11-14).) Article 13A of SCIP’s governing statutes required the Goldens to notify SCIP of their intention to transfer their SCIP shares to Panonia using a registered letter containing the full name, residence, and nationality of the buyer, as well as the purchase price. (Hall Decl. Ex. 6 at 12.) Mr. Golden admits that he did not send a registered letter, and that his notice to the board did not include the items listed in Article 13A. (Jordan Decl. Ex. 1 (M. Golden Dep.) at 41:9-15, 41:21-25, 70:18-71:1, 130:15-131:5.) In return, SCIP management was required to send to the Goldens a registered letter with return receipt indicating the management’s approval or disapproval of the share transfer. (Hall Decl. *1278Ex. 6 at 12.) The Goldens have never been able to produce this document. (Resp. at 6.) The Goldens respond that it is unsurprising that after all of these years neither they nor SCIP is able to produce SCIP’s consent letter. (Reply (Dkt. # 52) at 8-9.) They argue that this fact does not prove that the letter was not in fact sent, or that SCIP did not approve the sale at the time it occurred. (Id.)

Third, Plaintiffs assert that the Goldens breached the 1987 Agreement by selecting an improper person to accomplish the actual transfer of the shares. (Resp. at 6-7.) Plaintiffs assert that the Goldens selected attorney Claude Giraud to draft the legal documents, a cession de parts, and notify the parties when he had transferred the shares. (Jordan Decl. Ex. 1 (M. Golden Dep.) at 51:25-52:28, 53:13-20; Hall Decl. Ex. 10.) It is, however, undisputed that Mr. Girard was not a notaire, and that under French Polynesian law he could not legally transfer SCIP’s shares. (Mot. at 8; Resp. at 7.)2 The Goldens counter that Dr. Putz has admitted that he added Mr. Giraud’s name to the addendum of the 1987 Agreement, and therefore he can hardly complain about Mr. Giraud’s selection. (Reply at 8 (citing Supp. Hall Decl. (Dkt. # 53) Ex. A (Putz Dep.) at 59:24-60:1).)

Plaintiffs assert that they did not discover the Goldens’ alleged latent breach of the 1987 Agreement for nearly twenty years. (Resp. at 7.) As described below, Dr. Putz asserts that he did not discover the Golden’s breach until after his ouster by SCIP from Bungalow # 12 in 2007 and the Gold-ens’ subsequent refusal to assist him in regaining access to the bungalow. (See Resp. at 13.) Dr. Putz’s history with SCIP, however, has involved a number of conflicts with other SCIP shareholders. As a result of this history, the Goldens assert that Dr. Putz should have realized long before 2007 that there might have been a problem with Panonia’s ownership of SCIP shares. (Mot. at 15-16.)

In 2000, Michael Cavalli, the president of a California corporation, contacted Dr. Putz in his capacity as gerant of SCIP, to inquire about the process of converting SCIP shares into a deed or “to co-ownership” and withdrawing from SCIP.3 (Cavalli Decl. (Dkt. # 46) ¶ 9, Ex. B.) On August 5, 2000, Dr. Putz initially responded by stating that “[a]ccording to the corporate records of SCIP you are not a stockholder in SCIP.” (Supp. Hall Decl. Ex. C.) Later, on August 17, 2000, Dr. Putz wrote:

Without the approval of transfer by the French Polynesian government [the California corporation] can not [sic] legally become the stockholder of the shares # 111-127 in SCIP.

(Cavelli Decl. Ex. E.) The Goldens argue that this correspondence indicates that Dr. Putz had access to SCIP corporate records during his tenure as gerant and that he knew or should have known that there might be a legal problem with Panonia’s ownership of SCIP shares. (Mot. at 15; Reply at 9-10.)

Mr. Cavalli, however, purchased his shares after 1990 (Cavalli Decl. ¶ 2), which was the effective date for the French Polynesian law requiring the authorization of the French Polynesian government for the transfer of shares giving rights to land to foreigners (Leou Decl. (Dkt. # 47) ¶ 5). Dr. Putz’s 1987 purchase of the shares *1279associated with Bungalow # 12 predates this statutory requirement. Dr. Putz, therefore, asserts that, unlike the situation involving Mr. Cavelli, the statute would not have applied to Panonia’s purchase of SCIP shares.4 (Resp. at 14-15.) Dr. Putz has also testified that despite the fact that he was authorized to access SCIP’s files as gerant, SCIP’s bookkeepers or accountants, Brown & Kraft, refused to allow him access despite his repeated requests. (Jordan Decl. Ex. 7 (Putz Dep.) at 159:24-160:25.)

During his tenure as gerant, Dr. Putz had several conflicts with other SCIP shareholders. He opposed an attempt by a group of shareholders to convert their SCIP shares into deeds for their respective bungalows and withdraw from SCIP under Article 33 of SCIP’s statutes. (Id. Ex. 7 at 96:7-97:9.) This group of shareholders ultimately sued SCIP and won their right to withdraw as shareholders. (See Id. Ex. 7 at 109:24-110:2; id. Ex. 15.) Dr. Putz also had an acrimonious dispute with another SCIP shareholder, Frank Er-gas. Mr. Ergas had purchased the SCIP shares related to Bungalow # 3, which had been destroyed by a cyclone. (Hall Decl. Ex. 20.) In his role as gerant, Dr. Putz told Mr. Ergas that he could only rebuild his bungalow as it originally existed, and as a result Mr. Ergas was furious. (Hall Decl. Ex. 2 (Putz Dep.) at 98:9-24.)

In 2002, a French Polynesian court removed Dr. Putz as SCIP’s gerant in a proceeding initiated by Mr. Ergas (id. Ex. 2 at 49:1-12; Jordan Decl. Ex. 7 (Putz Dep.) at 96:7-18), and Mr. Ergas replaced Dr. Putz as the new gerant (Hall Decl. Ex. 2 (Putz Dep.) at 98:25-99:2). In October 2002, Dr. Putz wrote to Mr. Ergas in Mr. Ergas’s capacity as the new gerant, and requested the necessary documents for converting Panonia’s SCIP shares to a deed and withdrawing from SCIP. (Id. Ex. 13.) In August 2003, Mr. Ergas sent a SCIP form for withdrawal to Dr. Putz, which contained at least two errors. The form listed the Goldens as “Representative [sic] of the Company” that owned shares “# 216-224.”5 (Id. Ex. 15.) The Goldens, however, were not representatives of Panonia, and the shares associated with Bungalow # 12 were not # 216-224, but rather # 223-241. In any event, Mr. Ergas ultimately refused to allow Dr. Putz and Panonia to convert the shares associated with Bungalow # 12 or to withdraw from SCIP. (Jordan Decl. Ex. 7 (Putz Dep.) at 97:10-25.) Dr. Putz and Panonia eventually brought a lawsuit against SCIP in a French Polynesian court in their ongoing attempt to convert the SCIP shares and withdraw from the association. (Hall Decl. Ex 16.)

In 2005, during the course of the French Polynesian litigation, SCIP argued that the Goldens had not complied with SCIP statutes in transferring their shares to Panonia. (Hall Decl. Ex. 16 at Golden-100466.) In May 2005, during the course of the French Polynesian litigation, Dr. Putz contacted the Goldens for the first time since 1987. (Hall Decl. Ex. 1 (M. Golden Dep.) at 115:22-117:11.) Dr. Putz requested the Goldens’ assistance with regard to the French Polynesian litigation, and Mr. Golden agreed to help. (Id.) Mr. Golden executed an affidavit on May 31, *12802005 in which he stated that he had obtained SCIP management approval for his transfer of SCIP shares to Panonia in 1987.6 (Hall Decl. Ex. 17 (M. Golden Aff.) ¶¶ 4, 6.)

Despite Mr. Golden’s sworn affidavit that he had transferred his SCIP shares to Panonia,- in February 2007, SCIP ousted Dr. Putz from possession of Bungalow # 12. (Hall Decl. Ex. 2 (Putz Dep.) at 86:4-5.) SCIP posted a notice on the door to Bungalow # 12 that declared the Gold-ens, and not Plaintiffs, as the true owners of the bungalow. (Jordan Decl. Ex. 2.) The notice also stated that no one could legally rent the bungalow from Plaintiffs. (Id.)

In response, Dr. Putz contested the ouster with SCIP (Jordan Decl. Ex. 20) and notified the Goldens (id. Ex. 1 (M. Golden Dep.) at 191:6-24). Dr. Putz told the Goldens that SCIP was asserting that the Goldens were the true owners of Bungalow # 12. (Id.) Dr. Putz asked the Goldens to execute a power of attorney that would enable him to enter Bungalow # 12 and rent it to others, but at some point after April 2007, the Goldens refused. (Id. at 193:16-195:12.) The Gold-ens assert that they refused Dr. Putz’s request because he asked for a general power of attorney (id.), but Dr. Putz asserts that he asked only for a limited power of attorney directed solely toward permitting him to rent out Bungalow # 12 (see id. Ex. 3).

Dr. Putz was also engaged in a dispute with SCIP concerning the payment of SCIP association dues. (See Jordan Decl. Ex. 23.) Dr. Putz asserts that he paid all SCIP association dues through March 2007 (id. Ex. 22), and even paid SCIP dues in 2008 after Plaintiffs’ ouster (id. Ex. 23). In August 2008, however, Mr. Ergas, as SCIP’s gerant, contacted the Goldens and advised them that as the “owners” of the shares related to Bungalow # 12, they were responsible for the payment of outstanding SCIP dues. (Hall Decl. Ex. 18.) Mr. Ergas informed the Goldens that, unless they paid the dues that were in arrears within 30 days, the SCIP shares related to Bungalow # 12 would be sold at public auction. (Id.) In response, the Goldens paid the amount demanded by Mr. Ergas, and have continued to pay SCIP dues since that time. (Mot. at 11.)

Following Plaintiffs’ ouster, Mr. Golden has described himself and his wife as the owners of Bungalow # 12. (See Jordan Decl. Exs. 1 (M. Golden Dep.) at 170:17— 171:4, 177:25-178:5; id. Exs. 24-25.) The Goldens also admit that they have explored the idea of selling Bungalow # 12 on at least two occasions in order to recoup some of the association dues they have paid and other expenses they have incurred.7 (Hall Decl. Ex. 1 (M. Golden Dep.) at 165:17-25; Jordan Decl. Ex. 1 (M. Golden Dep.) at 166:1-25.) Thus, they have asserted ownership rights with regard to the bungalow.

Plaintiffs filed suit against the Goldens in the United States District Court for the Western District of Virginia on January 27, 2009, asserting claims including breach of the 1987 Agreement. (See Compl. (Dkt. # 1) ¶ 52.) On December 31, 2009, the Virginia court dismissed the action for lack of personal jurisdiction over the Goldens. *1281 (Id. Ex. G.) On April 30, 2010, Dr. Putz and Panonia filed the present action against the Goldens and SCIP in the Western District of Washington. (See generally id.)

III. ANALYSIS

A. Standards

Summary judgment is appropriate if the evidence, when viewed in the light most favorable to the non-moving party, demonstrates “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Galen v. Cnty. of L.A., 477 F.3d 652, 658 (9th Cir.2007). The moving party bears the initial burden of showing there is no genuine issue of material fact and that he or she is entitled to prevail as a matter of law. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. If the moving party meets his or her burden, then the non-moving party “must make a showing sufficient to establish a genuine dispute of material fact regarding the existence of the essential elements of his case that he must prove at trial” in order to withstand summary judgment. Galen, 477 F.3d at 658. The court is “required to view the facts and draw reasonable inferences in the light most favorable to the [non-moving] party.” Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007).

B. The Statute of Limitations, the Discovery Rule, and Equitable Tolling

The Goldens assert that Plaintiffs’ claims for negligent misrepresentation and breach of contract are barred by the statute of limitations. (Mot. at 13-18, 19-20.) A three-year statute of limitations applies to Plaintiffs’ claim for negligent misrepresentation. RCW 4.16.080. The statute of limitations in Washington for breach of contract is six years. RCW 4.16.040(1). Dr. Putz and Panonia respond that either the discovery rule or equitable tolling applies to prevent the statutes of limitations from barring either claim.8

1. Negligent Misrepresentation

The accrual of a cause of action for negligent misrepresentation is subject to the discovery rule. Sabey v. Howard Johnson & Co., 101 Wash.App. 575, 5 P.3d 730, 739 (2000). Under the discovery rule, the statute of limitations does not begin to run until a plaintiff discovers or reasonably could have discovered all the essential elements of the cause of action. See Allyn v. Boe, 87 Wash.App. 722, 943 P.2d 364, 372 (1997). The discovery rule requires 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. The plaintiff is charged with what a reasonable inquiry would have discovered.” 1000 Virginia Ltd. P’ship v. Vertecs Corp., 158 Wash.2d 566, 146 P.3d 423, 431 (2006) (citing Green v. A.P.C., 136 Wash.2d 87, 960 P.2d 912, 916 (1998)).

Dr. Putz and Panonia have alleged that the Goldens negligently misrepresented that they would transfer the SCIP shares representing Bungalow # 12 to Plaintiffs, and that they would arrange for approval of the transfer by the SCIP Board. (Compl. ¶¶ 69-76.) Plaintiffs have alleged that the Goldens made these representations at the time the 1987 Agreement was executed (see id. ¶¶ 23-24, 28, 30), and again in 2005 at the time that Mr. Golden executed his affidavit to assist Dr. Putz in *1282the French Polynesian litigation (see id. ¶¶ 42-43). Plaintiffs did not file suit in Virginia until 2009 (id. ¶ 52), and did not file the present suit until 2010. Plaintiffs assert that despite the three-year statute of limitations, their claims for negligent misrepresentation are not barred because they did not discover the Goldens’ misrepresentations until May 2007, when the Goldens refused to execute a power of attorney that would have allowed Plaintiffs access to Bungalow # 12 following their ouster by SCIP. (Resp. at 20.)

The Goldens assert, however, that Dr. Putz either knew or should have known that there might be a problem with Panonia’s ownership of SCIP shares long before May 2007. (Mot. at 19-20; Reply at 9-10.) First, the Goldens assert that, by virtue of his position as gerant, Dr. Putz had access to SCIP corporate documents and that these documents would have allowed him to determine the status of Panonia as a SCIP shareholder. (Reply at 10.) The Goldens argue that Dr. Putz’s August 5, 2000 letter to Mr. Cavalli, which references the corporate records of SCIP, is an admission that Dr. Putz had access to those records. (Id. at 9-10; Supp. Hall Decl. Ex. C.) First, viewing the evidence and inferences in the light most favorable to Plaintiffs, Dr. Putz’s statement in the August 5, 2000 letter does not establish that he had general access to SCIP corporate records. Even if he did have such access, the Goldens have failed to produce evidence that these records necessarily would have put Dr. Putz on notice of their alleged misrepresentations. In addition, Dr. Putz has expressly testified that despite his authority as gerant to access SCIP records, SCIP’s bookkeepers or accountants refused to grant him that access. (Jordan Decl. Ex. 7 (Putz Dep.) at 159:24-160:25.)

Next, the Goldens argue that because “Panonia stood in exactly the same position as the California corporation owned by Mr. Cavalli, Dr. Putz’s August 17, 2000 letter indicating that the California corporation could not become an owner of SCIP shares without' approval of the French Polynesian government is evidence that Dr. Putz was on notice concerning potential problems with Panonia’s ownership of SCIP shares. (Mot. at 19-20.) As discussed above, however, the French Polynesian law concerning the requirements for foreign ownership of real estate or real estate shares changed in 1990, after Panonia became the owner of SCIP shares representing Bungalow # 12, but before Dr. Putz wrote his August 17, 2000 letter to Mr. Cavalli concerning Mr. Cavalli’s California corporation. (See Leou Decl. ¶ 5.) Thus, Plaintiffs assert that Panonia and the California corporation did not stand in the same position, and accordingly Dr. Putz’s August 17, 2000 letter does not demonstrate that he was on notice concerning the Goldens’ alleged misrepresentations. (Resp. at 14-15.)

Finally, the Goldens assert that Mr. Er-gas’s August 2003 transmission of a SCIP withdrawal form to Dr. Putz, which “listed the Goldens as the owners of shares #223-241” should have put Dr. Putz on notice that he might have a problem with Panonia’s ownership of the shares. (Mot. at 20.) Contrary to the Goldens’ assertions, however, the form does not list the Goldens as the owners of shares## 223-241. Rather, it lists the Goldens as the “Representative [sic] of the Company” that owns the shares. (Hall Decl. Ex. 15.) By listing the Goldens rather than Dr. Putz, the form may have been in error concerning Panonia’s proper representative, but the form does not expressly state any error concerning Panonia’s ownership of the shares. Indeed, the form does not explicitly reference “Panonia” at all, but simply refers to “the Company.” (See id.)

*1283In addition to the error listing the Gold-ens as the representative of the company owning the shares affiliated with Bungalow # 12, the form is also in error concerning the SCIP share numbers associated with Bungalow # 12. (See id.) The form lists the share numbers as ## 216-222, instead of ##223-241. (See id.) Accordingly, viewing the evidence in the light most favorable to Dr. Putz, one could conclude that the SCIP representative who filled out the form simply did a sloppy job. Viewed in this light, the court cannot conclude that the form necessarily placed Dr. Putz on notice that there was any question concerning Panonia’s ownership of Bungalow # 12.

Dr. Putz has also argued that the errors on the form should be viewed in light of the contentious relationship between Dr. Putz and Mr. Ergas. (Resp. at 12,15.) In this light, one might conclude that the errors were simply an attempt by Mr. Ergas to erect roadblocks with respect to Plaintiffs’ request to withdraw from SCIP. (Id. at 15-16 (citing Jordan Decl. Ex. 7 (Putz Dep.) at 97:10-17).) In other words, one could reasonably view the errors on the withdrawal form as a sort of “tit for tat” with regard to Dr. Putz’s earlier opposition to Mr. Ergas’s remodel of his bungalow or Dr. Putz’s earlier opposition to the withdrawal of other shareholders. Based on the foregoing, the court concludes that there are numerous material issues of fact concerning whether Dr. Putz and Panonia were on inquiry notice prior to May 2007 concerning the Goldens’ alleged misrepresentations. Accordingly, the court denies the Goldens’ motion for summary judgment dismissing Plaintiffs’ claims for misrepresentation based on expiration of the statute of limitations.

2. Breach of Contract

As indicated in the court’s previous order denying the Goldens’ motion to dismiss, the discovery rule is not available under Washington law with respect to Plaintiffs’ breach of contract claims. (Order (Dkt. # 35) at 26 n. 13 (citing 1000 Virginia Ltd. P’ship, 146 P.3d at 430-31 (recognizing the narrow exception to general rule that discovery rule does not apply to breach of contract claims for contract claims involving latent construction defects)).) Equitable tolling, however, is available under appropriate circumstances to extend the statutory period with respect to breach of contract claims. “Equitable tolling is a legal doctrine that allows a claim to proceed where justice requires, even though it would normally be barred by the statute of limitations.” Trotzer v. Vig, 149 Wash.App. 594, 203 P.3d 1056, 1062 n. 9 (2009). Both the Goldens and Plaintiffs assert that to invoke equitable tolling, Plaintiffs must show (1) bad faith, deception, or false assurances by the defendant, and (2) the exercise of diligence by the plaintiff. (Resp. at 13 (citing Trotzer, 203 P.3d at 1062); Mot. at 13 (citing Trotzer, 203 P.3d at 1062).)

The parties spend much of their briefing discussing whether the Plaintiffs have demonstrated that the Goldens acted in bad faith or made false assurances to Dr. Putz. Plaintiffs assert that the Goldens made false assurances to Dr. Putz in 1987 concerning whether (1) the Goldens complied with SCIP governing statutes for the share transfer, (2) the Goldens obtained SCIP management approval for the share transfer, and (3) Mr. Girard had authority to execute a cession de parts. (See Resp. at 13-14.) In addition, Plaintiffs assert that Mr. Golden executed an affidavit in 2005 in which he again falsely assured Dr. Putz that the Goldens had obtained SCIP management approval for the share transfer. (Id. at 14.)

Based on Trotzer, the Goldens assert that Plaintiffs cannot demonstrate the necessary predicates for equitable tolling, *1284namely that the Goldens issued any false assurances to Plaintiffs. (Mot. at 14.) In Trotzer, the court found, following a bench trial, that the assurance the Defendants had given to Plaintiff in a notarized letter that they would “never do any work near the property line without first consulting [Plaintiff]” was not false because Defendants had in fact consulted with Plaintiff prior to commencing work. 203 P.3d at 1062. The procedural posture of this matter is significantly different than in Trotzer. In Trotzer, the court determined that the defendants’ assurances were not false following a bench trial. Here, the parties are moving for summary judgment. At this stage in the proceedings, unlike in Trotzer, the court cannot conclude that there are no material issues of fact concerning whether the Goldens’ alleged assurances to Dr. Putz in 1987 and 2005 were false.

The Goldens also argue that Plaintiffs cannot meet the second element of equitable tolling — namely, that they exercised diligence in pursuing their claims. (Mot. at 14-15.) The Goldens cite all of the same evidence with respect to Plaintiffs’ alleged lack of diligence that they cite with respect to their argument that Plaintiffs were placed on inquiry notice and thus not entitled to tolling under the discovery rule. (Mot. at 14-16; Reply at 4-6.) As the court discussed above, there are numerous issues of fact with respect to these issues preventing summary judgment. (See supra § III.B.l.)

Further, there is substantial evidence in the record indicating that Plaintiffs have not sat on their rights. Although the present state of the French Polynesian litigation between SCIP and Plaintiffs is unclear and disputed, there is no dispute that Plaintiffs initiated and pursued their claim against SCIP in French Polynesia.9 (See Jordan Decl. Ex. 7 (Putz Dep.) at 94:3-4; Ex. 16.) In addition, following their ouster from Bungalow # 12 in 2007, and the Gold-ens’ refusal to execute a power of attorney that would have enabled Plaintiffs to regain access to the Bungalow, Plaintiffs filed suit against the Goldens in 2009 in the Western District of Virginia. (See Hall Decl. Ex. 24.) When the Virginia court dismissed the action for lack of personal jurisdiction on December 31, 2009 (see id.), Plaintiffs re-filed just four months later in the Western District of Washington.10 (See generally Compl. (filed on April 30, 2010).) Accordingly, based on the test for equitable estoppel articulated by the Washington Court of Appeals in Trotzer, the court denies the Goldens’ motion for summary judgment dismissing Plaintiffs’ breach of contract claim based on the statute of limitations.

The court also notes, however, that by citing Trotzer, the parties have incorrectly limited the applicability of the doctrine of equitable tolling in Washington. In October 2011, the Washington Supreme Court expressly recognized that the availability of equitable tolling of the statute of limitations is not limited to circumstances “where one of the predicates of bad faith, deception, and false assurances [i]s shown.” In re Pers. Restraint of Carter, 172 Wash.2d 917, 263 P.3d 1241, 1247 (2011). In In re Personal Restraint of *1285 Bonds, 165 Wash.2d 135, 196 P.3d 672 (2008), the Court’s plurality held that equitable tolling did not apply because “the petitioner failed to show that his untimely filing was caused by another’s bad faith, deception, or false assurances.” Carter, 263 P.3d at 1247 (citing Bonds, 196 P.3d at 676). A two-Justice concurrence, however, would not have limited the application of equitable tolling to situations involving one of these predicates. Id. (citing Bonds, 196 P.3d at 677-78 (Alexander, C.J., concurring)). Further, the three-Justice dissent stated that it would have held that equitable tolling was available “when justice requires it.” Id. (citing Bonds, 196 P.3d at 678 (Sander, J., dissenting)). Accordingly, in Carter, the Washington Supreme Court recognized that the doctrine of equitable tolling applies more broadly than Washington case law may have indicated previously. 263 P.3d at 1247-48.

Based on the broader test articulated in Carter, the court also finds that the present circumstances preclude summary judgment in favor of the Goldens. The equitable circumstances that the court considers are as follows: In 2007, nearly twenty years after the parties executed an agreement to transfer SCIP shares representing Bungalow # 12 from the Goldens to Plaintiffs, SCIP ousted Plaintiffs from Bungalow # 12 and posted a notice declaring the Goldens as the rightful owners of the shares. (See Jordan Decl. Ex. 2.) There is evidence in the record indicating that by 2008 the Goldens began making statements asserting their personal ownership of the SCIP shares once again, and the Goldens admit that they have had access to and the opportunity to use the bungalow. (See, e.g., Jordan Decl. Ex. 1 (M. Golden Decl. at 186:15-187:6; id. Exs. 24, 25.)) Nevertheless, Mr. Golden also admits that Dr. Putz fully performed on his obligations under the 1987 Agreement, and paid the contract price for the SCIP shares to the Goldens. (Id. at Ex. 1 (M. Golden Dep.) at 124:19-126:2.) He has also admitted that he and his wife no longer have a right to retain the money Plaintiffs paid for Bungalow # 12. (Id. Ex. 1 at 178:6-15.) The equitable issue of concern to the court is that twenty years after Plaintiffs paid for the SCIP shares, the Goldens not only have effective possession of Bungalow # 12 once again, but have retained the purchase price paid by Plaintiffs as well, despite acknowledging that they have no right to do so. Although the record is incomplete, the forgoing circumstances raise factual issues sufficient to defeat summary judgment in favor of the Goldens with respect to the statute of limitations. The court finds that Plaintiffs have raised a triable issue of fact concerning equitable tolling.

C. Breach of Contract and the Implied Covenant of Good Faith and Fair Dealing

The Goldens assert that they are entitled to summary judgment with respect to the breach of contract claim “because there is no dispute of material fact that the Goldens did what they promised to do.” (Mot. at 16.) The court, however, views the evidence and all reasonable inferences in the light most favorable to Plaintiffs. Scott, 550 U.S. at 378, 127 S.Ct. 1769. As recited in the “Background” portion of this order, there are myriad material factual disputes concerning the Goldens’ performance under the 1987 Agreement. (See supra § II.) Accordingly, the court denies the Goldens’ motion for summary judgment of Plaintiffs’ claim for breach of contract.

In addition, the Goldens also move for summary judgment of Plaintiffs’ claim for breach of the implied covenant of good faith and fair dealing, arguing simply that because they were entitled to summary judgment of Plaintiffs’ breach of contract *1286claim, they are also entitled to summary judgment of this related claim. (Mot. at 18-19.) In Washington, every contract carries with it an implied covenant of good faith and fair dealing that obligates the parties to cooperate with one another so that each may obtain the full benefit of performance. Frank Coluccio Constr. Co., Inc. v. King County, 136 Wash.App. 751, 150 P.3d 1147, 1154 (2007) (citing Badgett v. Sec. State Bank, 116 Wash.2d 563, 807 P.2d 356, 360 (1991)). The duty, however, exists only in relation to performance of a specific contract term; there is no “ ‘free-floating’ duty of good faith and fair dealing that is unattached to an existing contract.” Keystone Land & Dev. Co. v. Xerox Corp., 152 Wash.2d 171, 94 P.3d 945, 949 (2004) (quoting Badgett, 807 P.2d at 360). If the court had granted the Goldens’ motion for summary judgment with respect to Plaintiffs’ contract claim, then the Goldens’ argument concerning their alleged breach of the duty of good faith may have succeeded. The court, however, has denied summary judgment with respect to Plaintiffs’ contract claim, and without more, denies summary judgment with respect to this claim, as well.

D. Negligent Misrepresentation

The essential elements of the tort of negligent misrepresentation in Washington are: (1) the defendant supplied information for the guidance of others in their business transactions that was false, (2) the defendant knew or should have known that the information was supplied to guide the plaintiff in his or her business transactions, (3) the defendant was negligent in obtaining or communicating the false information, (4) the plaintiff relied on the false information, (5) the plaintiffs reliance was reasonable, and (6) the false information proximately caused the plaintiff damages. Ross v. Kirner, 162 Wash.2d 493, 172 P.3d 701, 704 (2007) (citing Lawyers Title Ins. Corp. v. Baik, 147 Wash.2d 536, 55 P.3d 619, 623 (2002)). “The proof of such a claim must be clear, cogent, and convincing.” Van Dinter v. Orr, 157 Wash.2d 329, 138 P.3d 608, 609 (2006) (quoting Havens v. C & D Plastics, Inc., 124 Wash.2d 158, 876 P.2d 435, 447 (1994)).

The Goldens assert that they did obtain SCIP approval for the transfer of shares to Panonia in 1987, and thus any statements they made to that effect at or about the time the parties executed the 1987 Agreement or in the 2005 affidavit were not false. (Mot. at 20.) As described above in the “Background” portion of this order, however, there are numerous material factual disputes concerning the Goldens’ performance under the 1987 Agreement (see supra § II), and those same factual disputes would apply in determining whether the Goldens’ various statements concerning their contractual performance were false or not.

The Goldens also assert that, even if statements in the 2005 affidavit were false, Plaintiffs cannot prove that the affidavit caused them any damages. (Mot. at 20-21.) The court, however, cannot conclude that there are no triable issues of fact concerning damages related to the 2005 affidavit. A reasonable trier of fact could conclude that Mr. Golden’s affidavit delayed Plaintiffs’ discovery of the actual source of the problem with regard to Panonia’s title of the SCIP shares. The resulting delay would necessarily extend the period of time for which Plaintiffs were deprived of the use of the purchase price they paid in 1987, as well as the period of time for which Plaintiffs were required to pay maintenance costs and other fees on a property for which they did not hold clear title. Accordingly, the court denies the Goldens’ motion for summary judgment with respect to Plaintiffs’ negligent misrepresentation claim.

*1287E. Trespass

The Goldens assert that Plaintiffs have no claim for trespass against them because it was SCIP that ousted Plaintiffs from Bungalow # 12 and not the Goldens. (Mot. at 21.) Although this may be true, it is an incomplete picture of the factual record. SCIP ousted Plaintiffs based on its assertion that the Goldens were the true owners of Bungalow # 12. (Jordan Decl. Exs. 2, 5.) Following their ouster by SCIP, Plaintiffs notified the Goldens and sought their assistance in regaining access to Bungalow # 12 by asking the Goldens to execute a power of attorney. (Id. Exs. 2, 3.) The Goldens declined to execute the power of attorney, and continue to refuse Plaintiffs access to the bungalow. (Id. Ex. 1 (M. Golden Dep.) at 188:22-189:9, 191:6-24, 193:16-195:12.) When asked whether he considered himself to the owner of Bungalow # 12, Mr. Golden testified that “Recording to SCIP, yes.” (Id. Ex. 1 at 170:17-19.) The Goldens have access to and the opportunity to use Bungalow # 12 (id. Ex. 1 at 186:17-187:6) and have considered selling it on at least two occasions since Plaintiffs’ ouster (id. Ex. 1 at 166:1— 167:15; Hall Ex. 1 (M. Golden Dep.) at 165:17-25). The court agrees with Plaintiffs that these facts, when viewed in a light most' favorable to Plaintiffs, raise genuine issues of material fact supporting a claim for trespass on Plaintiffs’ rights with respect to Bungalow # 12. Accordingly, the court denies the Goldens’ motion for summary judgment on this claim.

F. Intentional Interference with Business Expectancy

The Goldens’ argument with respect to Plaintiffs’ claim for intentional interference with business expectancy is the same one the court previously rejected in denying Plaintiffs’ motion to dismiss. (Order at 32-33.) The court reaches the same result when considering the argument under a summary judgment standard. The Goldens argue that Plaintiffs’ claim should be dismissed because a party to a contract cannot be liable in tort for breaching its own contract. (Mot. at 22 (citing Houser v. Redmond, 16 Wash.App. 743, 559 P.2d 577, 580 (1977), aff'd, 91 Wash.2d 36, 586 P.2d 482 (1978)).) It is not, however, the 1987 Agreement with which Plaintiffs’ argue the Goldens have interfered. Rather, Plaintiffs argue that the Goldens’ have taken exclusive possession of Bungalow # 12, and prevented Plaintiffs from renting it to others. (Resp. at 22.) While he was in possession of Bungalow # 12, Dr. Putz frequently rented it to others. Indeed, there is evidence that he rented it “continuously” or “permanently.” (Jordan Decl. Ex. 1 (M. Golden Dep.) at 191:25-192:13; id. Ex. 5.) “A valid business expectancy includes any prospective contractual or business relationship that would be of pecuniary value.” Newton Ins. Agency & Brokerage, Inc. v. Caledonian Ins. Group, Inc., 114 Wash.App. 151, 52 P.3d 30, 33 (2002). Following his ouster by SCIP, Dr. Putz sought assistance from the Goldens in an attempt to maintain his ability to rent the bungalow. He asked the Goldens to execute a power of attorney that would enable him to rent the bungalow even after his ouster, but the Goldens refused.11 (Id. at 192:20-195:12.) It is the “rental expectancy” from third parties with which Plaintiffs assert the Goldens have tortiously interfered, and not the 1987 Agreement to which the Goldens *1288were parties. (Resp. at 22-23.) Viewing the evidence in the light most favorable to Plaintiffs, the court denies the Goldens’ motion for summary judgment with respect to Plaintiffs’ claims for tortuous interference with a business expectancy.

G. Declaratory Judgment

The Goldens assert that Plaintiffs’ claim for declaratory judgment should be dismissed on summary judgment based on all of the same grounds asserted with respect to Plaintiffs’ underlying claims as discussed above. (Mot. at 22.) Because the court has denied the Goldens’ motion with respect to the underlying causes of action, it also denies the Goldens’ motion with respect to Plaintiffs’ claim for declaratory relief.

IV. CONCLUSION

For the foregoing reasons, the court DENIES the Goldens’ motion for summary judgment (Dkt. # 45).

Putz v. Golden
847 F. Supp. 2d 1273

Case Details

Name
Putz v. Golden
Decision Date
Jan 24, 2012
Citations

847 F. Supp. 2d 1273

Jurisdiction
United States

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