Wallace v. Kuehner, 25897-8-II.
| Decision Date | 17 May 2002 |
| Docket Number | No. 25897-8-II.,25897-8-II. |
| Citation | 46 P.3d 823,111 Wash.App. 809 |
| Parties | Donald WALLACE, Appellant and Cross-Respondent, v. Michael KUEHNER and Brenda Wallace Kuehner, husband and wife; and Kuehner Wallace Enterprises, Inc., Respondents and Cross-Appellants. |
| Court | Washington Court of Appeals |
Peter Thomas Petrich, Davies Pearson PC, Tacoma, for Respondents/Cross-Appellants.
Elizabeth Thompson-Lagerberg, Vanderstoep Remund Kelly & Blinks, Olympia, Scott Edward Blinks, Vandersoep Remund, Chehalis, for Appellants/Cross-Respondents.
Donald Wallace appeals the trial court's ruling that the statute of limitations barred his suit to recover money he advanced his daughter and son-in-law. Wallace claims that (1) because one loan for $100,000 was secured by a promissory note, the trial court erred in applying the statute of limitations for oral contracts instead of the statute applicable to written contracts; and (2) the court erred by applying a two-year instead of a three-year delay in the commencement of the running of the statute of limitations on another loan (for $45,000), under the exception to the general rule that the statute of limitations on "demand loans" begins running immediately after the loan is made.
Wallace's daughter and son-in-law, Brenda and Michael Kuehner, counter-appeal, claiming the trial court erred in denying their request for attorney fees under the promissory note and CR 68.
We hold that there was no written or oral contract to repay the $100,000, and that the oral contract on the $45,000 loan delayed payment for two years; thus, these claims are barred. We also hold that the trial court properly denied the Kuehners' request for attorney fees.
Wallace made a nice living in farming and construction in Lewis County and presented money to all three of his children from time to time. At some point, Wallace told his daughter Brenda that there would or could be advances on her inheritance.
In 1991, the Kuehners moved from Seattle back home to Lewis County to establish a housing development company. Before the move, Wallace and the Kuehners extensively discussed their plans; the Kuehners testified it was understood that Wallace would help them financially as they got started. Shortly after the move, the Kuehners needed $100,000 for construction costs associated with their development called Napa Estates. On or about March 4, 1991, Michael Kuehner gave Wallace a promissory note executed that day for $100,000. Wallace took the note, saying he would have his lawyer review it, but he did not agree to loan the money.
The testimony at trial was undisputed: Between a few days to a week later, Wallace told the Kuehners that the note "wasn't worth the paper it was written on" unless they had the money to repay it.3 Report of Proceedings at 90, 190, 255. Wallace personally assisted the Kuehners by doing construction work on the development. When it became clear that only cash would forestall foreclosure, Wallace presented the Kuehners with a cashier's check for $100,000 on April 3, 1991. The trial judge found that Wallace made the statement questioning the worth of the promissory note after he advanced the $100,000. As discussed under the first issue below, it was undisputed at trial that Wallace made the statement before advancing the $100,000.
In September 1991, Wallace again provided the Kuehners money. This time it was $40,000; the memo line of the check read "loan for one year." Clerk's Papers at 9. The court found that this loan met the requirements of a written contract and was enforceable. The Kuehners have not appealed the court's judgment, and this loan is not before us.
In March 1992, Wallace provided the Kuehners $45,000, in the form of Wallace's personal check. The memo line stated "loan." The trial court found this loan was an oral contract, with a three-year statute of limitations. It also found that the parties contemplated a two-year delay in repayment, which delayed the beginning of the statute of limitations period until 1994:
The loan in check # 2 [the $45,000] is an oral contract with a statute of limitations of three years. Both parties anticipated there would be a delay in repayment of the loan until 1994. Therefore, the statute of limitations on the loan began to run in 1994. The statute of limitations barred collection of loan on Check # 2 after 1997.
Wallace verbally demanded payment or a written acknowledgement of the debts in September of 1997. In correspondence dated November 19, 1997, Wallace's attorney made a formal demand for payment. On January 14, 1998, Wallace sued the Kuehners and their business, Kuehner-Wallace Enterprises, for repayment of six loans Wallace claimed he provided the Kuehners from 1991 to 1994. Only two of the loans are at issue in this appeal, one for $100,000 that Wallace claims was secured by a promissory note, and one for $45,000, evidenced by a check with the notation "loan" on the memo line.
The main issue at trial was the nature of the monetary presentments to the Kuehners, (1) whether they were intended as loans, gifts, or advancements on Brenda Kuehner's inheritance; and (2) if they were loans, what statute of limitations applied to their repayment. The trial court found Wallace "repudiated" the promissory note for the $100,000. The court concluded that this repudiation of the note rendered the loan an oral contract subject to the three-year statute of limitations.
The court also found that the parties intended a two-year delay in payment on the loans, forestalling commencement of the running of the statute of limitations until April 1994. Thus, it ruled that Wallace's claims to enforce the oral contracts expired in April 1996 ($100,000) and March 1997 ($45,000). The court dismissed Wallace's claims for repayment of both the $100,000 and the $45,000.
In resolving this appeal, we answer five questions. First, was there a written contract between Wallace and the Kuehners to repay the $100,000? Second, was there an oral contract between Wallace and the Kuehners to repay the $45,000? Third, does substantial evidence support the trial court's finding that the parties contemplated a two-year delay in repayment of the $45,000? Fourth, are the Kuehners entitled to recover attorney fees? And fifth, was the service by fax of the Kuehners' offer of judgment effective?
Wallace challenges the trial court's finding that he repudiated the promissory note after giving he Kuehners the check for $100,000. Our review of a trial court's findings of fact and conclusions of law is a two-step process. Landmark Dev., Inc. v. City of Roy, 138 Wash.2d 561, 573, 980 P.2d 1234 (1999). First, we must determine if the trial court's findings of fact were supported by substantial evidence in the record. If so, we must then determine whether those findings of fact support the trial court's conclusions of law. Landmark Dev., Inc.,138 Wash.2d at 573,980 P.2d 1234.
"`Substantial evidence' exists when there is a sufficient quantum of proof to support the trial court's findings of fact." Org. to Preserve Agric. Lands v. Adams County, 128 Wash.2d 869, 882, 913 P.2d 793 (1996) (citing In re Sego, 82 Wash.2d 736, 739-40, 513 P.2d 831 (1973)). We agree with Wallace that the record lacks substantial evidence to support the trial court's finding that Wallace repudiated the note after he gave the Kuehners the $100,000. The promissory note is dated March 4, 1991. The cashier's check for $100,000 is dated April 3, 1991.4 All the evidence before the court established that the note was never accepted, and Brenda Kuehner testified that, within a week of its presentation, Wallace said he had "thrown it in the garbage." Report of Proceedings at 255. Wallace advanced the $100,000 approximately one month later.
Wallace's testimony is not as definitive as the Kuehners' regarding the sequence of events surrounding the promissory note and Wallace's subsequent deposit of the $100,000 in the Kuehners' bank account. But it still does not support the finding that he repudiated the note after advancing the $100,000. When testifying to what happened after Michael Kuehner gave him the note, Wallace stated:
Well, I think I told him I would have to show it to the attorney, but I never did take it to the attorney. And I thought about it for a while and finally I figured it meant on demand, so I would give him the money for it.... I told him it wasn't worth the paper it was wrote [sic] on unless he had cash to pay it off....
Brenda Kuehner testified that her conversation about the promissory note occurred approximately four days after Michael Kuehner gave the note to Wallace, and at that meeting, Wallace stated his attorney had told him the note "wasn't worth the paper it was written on and that he had thrown it in the garbage." Report of Proceedings at 255. She believed the loan was off at that point.
Michael Kuehner likewise testified that at their next meeting (approximately a week after he gave Wallace the promissory note), Wallace repeated his attorney's assessment of the note: Michael Kuehner believed that Wallace had rejected the promissory note. Brenda Kuehner testified that at a subsequent meeting she "whined and I cried ... [and][h]e gave me $100,000." Report of Proceedings at 256.
The evidence establishes that Wallace rejected the promissory note before giving Brenda the cashier's check for $100,000. Also, the record does not establish that the offer was revived at any time. The trial court erred, both in finding that Wallace questioned the value of the note after presenting the Kuehners with $100,000, and in ruling that this amounted to a repudiation.
Repudiation of a contract before there has been a breach by nonperformance is called an anticipatory breach or (the more precise form)...
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