Alexander v. Sanford, 69637–8–I.
Decision Date | 12 May 2014 |
Docket Number | No. 69637–8–I.,69637–8–I. |
Citation | 325 P.3d 341,181 Wash.App. 135 |
Court | Washington Court of Appeals |
Parties | Cindy ALEXANDER; Blocker Ventures, LLC; Chris Clark; R. Bruce Edgington; Kipp Johnson and Jennifer Johnson, husband and wife; Gopikrishna Kanuri and Himabindu Kanuri, husband and wife; Chris Kasprzak and Elizabeth Kasprzak, husband and wife; Paul Larkins and Joyce Hyojung Larkins, husband and wife; Kristine Magnussen; Scott McKillop; Caine Ott and Dana Ott, husband and wife; Mara Patton; Peter Richards; Dante Schultz; Winifred D. Smith; Robert Stoddard and Colette Stoddard, husband and wife; Neil West; Liang Xu and Jia Lu Duan, husband and wife, Appellants/Cross Respondents, v. Gary SANFORD and Jane Doe Sanford, and their marital community; Paul Burckhard and Muriel Burckhard, and their marital community; James Sansburn and Jane Doe Sansburn, and their marital community; Lozier Homes Corporation, a Washington corporation; Respondents/Cross Appellants, Richard Peter and Jane Doe Peter, and their marital community; Shana Holley and Richard Holley, and their marital community; Brett Backues and Jane Doe Backues, and their marital community; Joseph Cusimano and Jane Doe Cusimano, and their marital community; Patricia Hovda and John Doe Hovda, and their marital community; Alexander W. Philip and Natalia T. Philip, and their marital community, Respondents, Jason Farnsworth and Jane Doe Farnsworth, and their marital community; Huckleberry Circle, LLC, a Washington limited liability company; Diane Glenn and John Doe Glenn, and their marital community; Construction Consultants of Washington, LLC, a Washington limited liability company, Defendants. |
181 Wash.App. 135
325 P.3d 341
Cindy ALEXANDER; Blocker Ventures, LLC; Chris Clark; R. Bruce Edgington; Kipp Johnson and Jennifer Johnson, husband and wife; Gopikrishna Kanuri and Himabindu Kanuri, husband and wife; Chris Kasprzak and Elizabeth Kasprzak, husband and wife; Paul Larkins and Joyce Hyojung Larkins, husband and wife; Kristine Magnussen; Scott McKillop; Caine Ott and Dana Ott, husband and wife; Mara Patton; Peter Richards; Dante Schultz; Winifred D. Smith; Robert Stoddard and Colette Stoddard, husband and wife; Neil West; Liang Xu and Jia Lu Duan, husband and wife, Appellants/Cross Respondents,
v.
Gary SANFORD and Jane Doe Sanford, and their marital community; Paul Burckhard and Muriel Burckhard, and their marital community; James Sansburn and Jane Doe Sansburn, and their marital community; Lozier Homes Corporation, a Washington corporation; Respondents/Cross Appellants,
Richard Peter and Jane Doe Peter, and their marital community; Shana Holley and Richard Holley, and their marital community; Brett Backues and Jane Doe Backues, and their marital community; Joseph Cusimano and Jane Doe Cusimano, and their marital community; Patricia Hovda and John Doe Hovda, and their marital community; Alexander W. Philip and Natalia T. Philip, and their marital community, Respondents,
Jason Farnsworth and Jane Doe Farnsworth, and their marital community; Huckleberry Circle, LLC, a Washington limited liability company; Diane Glenn and John Doe Glenn, and their marital community; Construction Consultants of Washington, LLC, a Washington limited liability company, Defendants.
No. 69637–8–I.
Court of Appeals of Washington,
Division 1.
May 12, 2014.
[325 P.3d 347]
Leonard D. Flanagan, Justin D. Sudweeks, Daniel Stephen Houser, Stein, Flanagan, Sudweeks & Houser, PLLC, Seattle, WA, for Appellants.
Brian William Esler, Miller Nash LLP, Jerret E. Sale, Bullivant Houser Bailey P.C., Deborah Lynn Carstens, Attorney at Law, Bennett J. Hansen, Preg O. Donnell & Gillett PLLC, Andrew H. Salter, Veris Law Group, Seattle, WA, Philip Greene Bardsley, Attorney at Law, Edmonds, WA, for Respondents.
DWYER, J.
¶ 1 Eighteen condominium owners (collectively Homeowners) filed suit against Gary Sanford, Paul Burckhard, James Sansburn, Richard Peter, Shana Holley, Brett Backues, Joseph Cusimano, Jason Farnsworth, Patricia Hovda, Alexander Philip, Huckleberry Circle, LLC, Lozier Homes Corporation, Diane Glenn, and Construction Consultants of Washington, LLC 1 for breach of the board member duty of care, negligence, violation of the Consumer Protection Act 2 (CPA), negligent misrepresentation, fraud by omission and misrepresentation, and civil conspiracy. Pursuant to Civil Rule (CR) 12(b)(6), the trial court dismissed Homeowners' claims against Respondents as untimely filed.3 Homeowners appealed. Sanford, Burckhard, Sansburn, and Lozier Homes cross appealed, asserting that the trial court erred by declining to award attorney fees against Homeowners for filing a frivolous lawsuit.
¶ 2 Contrary to the trial court's ruling, we hold that Washington law does not provide that a cause of action necessarily accrues against a corporate board member no later than upon the board member's resignation. We hold, instead, that the doctrine of adverse domination applies in Washington. The application of that doctrine to the pleadings in this case demonstrates that several of Homeowners' claims should not have been dismissed on the face of the complaint as untimely filed. However, given that we also hold both that directors of a homeowners' association do not owe fiduciary-like duties to future purchasers and that Homeowners failed to plead all of the elements of a CPA claim, various of Homeowners claims were properly dismissed. Accordingly, we affirm in part and reverse in part.
¶ 3 A trial court's ruling on a motion to dismiss under CR 12(b)(6) presents a question of law, which we review de novo. Cutler v. Phillips Petroleum Co., 124 Wash.2d 749, 755, 881 P.2d 216 (1994). A CR 12(b)(6)
[325 P.3d 348]
motion questions only the legal sufficiency of the allegations in a pleading, asking whether there is an insuperable bar to relief. Contreras v. Crown Zellerbach Corp., 88 Wash.2d 735, 742, 565 P.2d 1173 (1977). The purpose of CR 12(b)(6) is to weed out complaints where, even if that which the plaintiff alleges is true, the law does not provide a remedy. McCurry v. Chevy Chase Bank, FSB, 169 Wash.2d 96, 101, 233 P.3d 861 (2010).
Under CR 12(b)(6), dismissal is appropriate only if “it appears beyond doubt that the plaintiff cannot prove any set of facts which would justify recovery.” [Tenore v. AT & T Wireless Servs., 136 Wash.2d 322, 330, 962 P.2d 104 (1998) ]. In undertaking such an analysis, “a plaintiff's allegations are presumed to be true and a court may consider hypothetical facts not included in the record.” Id.
Burton v. Lehman, 153 Wash.2d 416, 422, 103 P.3d 1230(2005).
¶ 4 Homeowners all own residential units at Huckleberry Circle condominium complex in Issaquah.4 The declarant of the complex is Huckleberry Circle, LLC (Declarant). The Declarant's sole member is Lozier Homes Corporation (Lozier Homes). All unit owners in the complex are members of the Huckleberry Circle Condominium Owners Association (Association), which is governed by a three voting-member board of directors. The Association was created on June 29, 2000.
¶ 5 The Association's first board consisted of Sanford, Burckhard, and Sansburn. In their complaint, Homeowners allege that at the time of development, Declarant, Lozier Homes, Sanford, Burckhard, and Sansburn were aware, or should have been aware, that the complex “was not being designed or constructed in a manner consistent with minimum requirements of building code [sic] with respect to weatherproofing.” Homeowners further allege that insufficient weatherproofing was a pervasive problem throughout this region, and that Declarant, Lozier Homes, Sanford, Burckhard, and Sansburn were aware of this fact at that time.
¶ 6 Declarant, Lozier Homes, Sanford, Burckhard, and Sansburn prepared a limited warranty, developed a “maintenance program,” and hired a “licensed inspector” for the complex. Homeowners allege that the purpose of these actions “was to give the appearance of due diligent inspection of the construction quality of the building envelope, while not in fact undertaking an intrusive investigation of building components which would have revealed water intrusion.” Declarant, Lozier Homes, Sanford, Burckhard, and Sansburn retained Glenn, d/b/a The Construction Consultants, as the complex's inspector. Glenn was not a licensed inspector but, rather, was a political activist for the building industry.
¶ 7 Homeowners further allege that, in order to protect themselves from liability, Declarant, Lozier Homes, Sanford, Burckhard, and Sansburn included provisions in the project declaration that allowed Declarant to appoint a fourth nonvoting member to the board and that limited “the power of the Association's Board and the Association to engage in litigation against the Declarant for violation of the implied warranties of quality under the Washington Condominium Act.”
¶ 8 Burckhard resigned from the board on May 15, 2001, at which time he was replaced by Holley. Between May and November 2001, Glenn performed multiple nonintrusive inspections of the complex, which revealed only minor repair issues. On May 9, 2002, Sansburn and Holley resigned from the board, and the Association elected Backues, Cusimano, and Peter in their place. On that same date, Declarant exercised its right to add a nonvoting member to the board. Declarant appointed Sanford to this position.5 Homeowners allege that “Sanford's role on the Board was to monitor its efforts to evaluate
[325 P.3d 349]
the construction quality of the Project, and dissuade the Board from prosecuting the Association's warranty rights.”
¶ 9 On August 13, 2002, the board hired Glenn to perform another inspection of the complex. Homeowners allege that “Sanford did not advise the Board that Glenn had no experience in helping condominium associations identify concealed defects and damage.” Glenn's inspection again did not find any serious issues or defects.
¶ 10 In March 2003, Ken Harer, a construction defect attorney and architect, contacted the board in order to inform it that the complex showed signs of potentially serious hidden construction defects and that the statutory limitation period on any warranty claims would soon expire. Peter met with Harer, who explained his concerns. Shortly thereafter, Peter e-mailed Backues and Cusimano regarding the meeting and expressed concern that he might have a conflict of interest because he was employed by an affiliate of Lozier Homes. The board took no action based on Harer's advice.
¶ 11 Peter notified the board in April 2003 that he intended to resign, but the board instead had him switch terms with another member so that someone could be elected to replace him in May. Also that April, the board received its first complaint of water leaking through a window in one of the units. None of this information appeared in any of the board's minutes. Homeowners allege that “the decision to omit these facts from the minutes was part of a deliberate effort on the part of Defendant Peter and/or the other Board members to conceal material information from unit owners.”
¶ 12 Peter resigned from the board on May 29, 2003, and Farnsworth was elected to replace him. On August 20, 2003, the property manager contacted contractor Mark Jobe regarding bids for deck maintenance and deck drainage issues. Jobe stated:
Yes, that is a project I am familiar with. There appears to be a serious problem with deck slope. Ponded water is present under the sleeper. Also while I was there I noted the flashing above the brick veneer has been caulked closed. Closed flashing is a serious problem that generally leads to big issues. Also it is often used to mask other problems. This...
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