Kinney v. Cook, No. 27251-6-III.

CourtCourt of Appeals of Washington
Writing for the CourtBrown
Citation150 Wn. App. 187,208 P.3d 1
PartiesClark E. KINNEY and Barbara E. Kinney, individually and the marital community, Appellants, v. Kenneth B. COOK, a single man, Respondent.
Decision Date21 May 2009
Docket NumberNo. 27251-6-III.
208 P.3d 1
150 Wn. App. 187
Clark E. KINNEY and Barbara E. Kinney, individually and the marital community, Appellants,
v.
Kenneth B. COOK, a single man, Respondent.
No. 27251-6-III.
Court of Appeals of Washington, Division 3.
May 21, 2009.

[208 P.3d 2]

Maris Baltins, Tamara W. Murock, Baltins & Murock, P.S., Spokane, WA, for Appellants.

John D. Munding, Attorney at Law, Spokane, WA, for Respondent.

BROWN, J.


¶ 1 Clark and Barbara Kinney appeal the summary dismissal of their August 1, 2007 suit alleging contract and Uniform Commercial Code (UCC) violations against Kenneth Cook. The Kinneys contend the trial court erred in deciding their breach of stock-pledge agreement claims were time barred. Because the Kinneys allege a January 2000 contract breach, under the six-year statute of limitations for contract claims, their claim is time barred. We reject the Kinneys' attempt to extend the discovery rule to these facts, and affirm. 1000 Virginia Ltd. P'ship v. Vertecs Corp., 158 Wash.2d 566, 575-78, 146 P.3d 423 (2006).

FACTS

¶ 2 In 1993, Mr. Cook and the Kinneys became equal shareholders in Spokane Freightliner, Inc. (the corporation). Mr. Cook loaned the Kinneys $225,000, which the Kinneys used to purchase a 50 percent corporate interest — consisting of 50,000 stock shares. The promissory note was secured by a pledge agreement giving Mr. Cook a security interest in the Kinneys' stock. The pledge agreement partly required Mr. Cook, "to use reasonable care in the custody and preservation of the collateral" and provided the Kinneys UCC rights and remedies. Clerk's Papers (CP) at 29. This is the third lawsuit by the Kinneys against Mr. Cook flowing from this business arrangement.

¶ 3 First Lawsuit. In 1997, Mr. Cook purchased the Kinneys' shares in the corporation, in exchange for cancelling the promissory note and the pledge agreement, but in July 2000, after the Kinneys' first litigation determined violations of the Securities Act of Washington (Act), chapter 21.20 RCW, the trial court ordered Mr. Cook and the corporation to return the Kinneys' stock shares pursuant to RCW 21.20.430(2). The court also ordered the Kinneys to return the purchase consideration, including reinstatement of the promissory note and the pledge agreement, but without interest from 1997 to the judgment date. In addition, the Kinneys were reinstated as guarantors of the debts of the corporation. Immediately after judgment, Mr. Cook demanded payment on the promissory note and the Kinneys complied, receiving their stock shares in return.

¶ 4 Second Lawsuit. In 2003, the Kinneys sued Mr. Cook for violations of the Act, concerning a corporate guarantee of a January 2000 $4.5 million loan from Mercedes-Benz

208 P.3d 3

Credit Corporation (Mercedes-Benz) to Select Credit & Leasing, LLC (Select Credit), a company owned by Mr. Cook. The alleged security violation was allegedly discovered in April 2001 bankruptcy proceedings when Mr. Cook filed a reorganization plan listing the $4.5 million loan. Eventually, our Supreme Court affirmed the trial court's decision to grant Mr. Cook's CR 12(b) dismissal motion. See Kinney v. Cook, 159 Wash.2d 837, 843-46, 154 P.3d 206 (2007). Essentially, the Supreme Court agreed that the Kinneys failed to state a claim under the Act. See id.

¶ 5 Third Lawsuit. On August 1, 2007, in the present litigation, the Kinneys sued on three causes of action stemming from Mr. Cook's alleged corporate mismanagement in using the corporation to guarantee the $4.5 million loan: first, breach of the pledge agreement, second, UCC secured transaction violations, and third, breach of the implied covenant of good faith and fair dealing under the pledge agreement.

¶ 6 Mr. Cook moved to dismiss under CR 12(b)(6), requesting the trial court consider evidence outside of the complaint. The parties offered voluminous materials considered by the trial court in its ruling. Much of the briefing below and here relates to when the Kinneys did or should have discovered the $4.5 million loan based upon the prior litigation and the bankruptcy proceedings. After a hearing, the trial court granted Mr. Cook's dismissal motion on all three of the Kinneys' causes of action, finding each barred by the statute of limitations. The Kinneys unsuccessfully moved for reconsideration. The Kinneys appealed.

ANALYSIS
A. Summary Judgment

¶ 7 The issue is whether the trial court erred in granting summary dismissal of all claims as time-barred. The Kinneys contend the discovery rule applies to determine when the statute of limitations began to run and a genuine issue of material fact remains as to when they learned of Mr. Cook's breach of the pledge agreement. We disagree.

¶ 8 Under CR 12(b)(6), "a defendant may move to dismiss where a plaintiff's pleadings do not state a claim for which relief can be granted." Mueller v. Miller, 82 Wash.App. 236, 245-46, 917 P.2d 604 (1996) (citing Danzig v. Danzig, 79 Wash.App. 612, 616, 904 P.2d 312 (1995)). Further, "[i]f ... matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in rule 56." CR 12(b); Berst v. Snohomish County, 114 Wash.App. 245, 251, 57 P.3d 273 (2002).

¶ 9 Here, when considering Mr. Cook's motion to dismiss under CR 12(b)(6), the trial court considered materials outside of the pleadings. Accordingly, we review the motion under the summary judgment standards. See CR 12(b); Berst, 114 Wash.App. at 251, 57 P.3d 273.

¶ 10 We review a grant of summary judgment de novo, engaging in the same inquiry as the trial court. Lybbert v. Grant County, 141 Wash.2d 29, 34, 1 P.3d 1124 (2000). "[A]n appellate court can sustain the trial court's judgment upon any theory established by the pleadings and supported by the proof, even if the trial...

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65 practice notes
  • Jensen v. Misner, No. 75908-6-I
    • United States
    • Court of Appeals of Washington
    • December 26, 2017
    ...his power.").53 Olsen Media v. Energy Sciences, 32 Wash.App. 579, 588, 648 P.2d 493 (1982).54 Kinney v. Cook, 150 Wash.App. 187, 195, 208 P.3d 1...
  • West v. Marzano, 41497-0-II
    • United States
    • Court of Appeals of Washington
    • October 3, 2012
    ...on any ground supported by the record below. RAP 9.12; Bennett v. Hardy, 113 Wn.2d 912, 918, 784 P.2d 1258 (1990); Kinney v. Cook, 150 Wn.App. 187, 192, 208 P.3d 1 (2009). We also review challenged agency action under the PRA and interpretation of the OPMA de novo. Gronquist, 159 Wn.App. at......
  • In re Marriage of Kirkendoll, 47832-3-II
    • United States
    • Court of Appeals of Washington
    • October 4, 2016
    ...delay or the failure to comply or to pay sanctions to the court." Such compensatory damages may include attorney fees. Kinney v. Cook, 150 Wn.App. 187, 195, 208 P.3d 1 (2009) (quoting Yurtis v. Phipps, 143 Wn.App. 680, 696, 181 P.3d 849 (2008)). '"An appeal is frivolous if, considering the ......
  • Sheats v. City of E. Wenatchee, No. 35555-1-III
    • United States
    • Court of Appeals of Washington
    • December 11, 2018
    ...An appeal is frivolous if there are no debatable issues on which reasonable minds might differ. Kinney v. Cook, 150 Wash. App. 187, 195, 208 P.3d 1 (2009). Here, we agreed with Officer Sheats that the lower court had subject matter jurisdiction, that the parties waived their defense of lack......
  • Request a trial to view additional results
65 cases
  • Jensen v. Misner, No. 75908-6-I
    • United States
    • Court of Appeals of Washington
    • December 26, 2017
    ...his power.").53 Olsen Media v. Energy Sciences, 32 Wash.App. 579, 588, 648 P.2d 493 (1982).54 Kinney v. Cook, 150 Wash.App. 187, 195, 208 P.3d 1...
  • West v. Marzano, 41497-0-II
    • United States
    • Court of Appeals of Washington
    • October 3, 2012
    ...on any ground supported by the record below. RAP 9.12; Bennett v. Hardy, 113 Wn.2d 912, 918, 784 P.2d 1258 (1990); Kinney v. Cook, 150 Wn.App. 187, 192, 208 P.3d 1 (2009). We also review challenged agency action under the PRA and interpretation of the OPMA de novo. Gronquist, 159 Wn.App. at......
  • In re Marriage of Kirkendoll, 47832-3-II
    • United States
    • Court of Appeals of Washington
    • October 4, 2016
    ...delay or the failure to comply or to pay sanctions to the court." Such compensatory damages may include attorney fees. Kinney v. Cook, 150 Wn.App. 187, 195, 208 P.3d 1 (2009) (quoting Yurtis v. Phipps, 143 Wn.App. 680, 696, 181 P.3d 849 (2008)). '"An appeal is frivolous if, considering the ......
  • Sheats v. City of E. Wenatchee, No. 35555-1-III
    • United States
    • Court of Appeals of Washington
    • December 11, 2018
    ...An appeal is frivolous if there are no debatable issues on which reasonable minds might differ. Kinney v. Cook, 150 Wash. App. 187, 195, 208 P.3d 1 (2009). Here, we agreed with Officer Sheats that the lower court had subject matter jurisdiction, that the parties waived their defense of lack......
  • Request a trial to view additional results

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