Shepard v. Holmes
185 Wash. App. 730
| Wash. Ct. App. | 2014Background
- In July 2007 Sharon Shepard purchased property described as Lots 1–4 on a short plat; she believed the four lots could be sold separately.
- A title commitment and policy from Chicago Title included a short plat copy with a disclaimer; Shepard later tried to sell two lots in 2011.
- Shepard learned in 2011 (via the county planner) that a 1998 Deed of Consolidation had merged the four lots into one; she filed a title claim with Chicago Title, which denied coverage.
- Shepard sued in December 2012 alleging breach of contract, negligent misrepresentation, CPA violations, and bad-faith failure to pay against the sellers, Sun River (the real estate broker/agent), and Chicago Title.
- Defendants moved to dismiss/for summary judgment as time-barred; the trial court treated evidence outside the pleadings as summary-judgment material and held the claims accrued at closing (July 2007) because the recorded deed gave constructive notice; it dismissed the misrepresentation and CPA claims and denied Shepard leave to amend to add a written-contract claim against Sun River as futile/untimely. The court awarded Sun River attorney fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether misrepresentation and CPA claims were time-barred | Shepard: discovery rule delayed accrual until 2011 when she learned of the consolidation deed | Sun River/Chicago Title: recorded deed gave constructive notice; claims accrued at 2007 closing | Held: Claims accrued at closing (2007); statutes of limitation ran before 2012 suit; summary judgment affirmed |
| Whether Shepard’s original complaint pleaded a contract claim against Sun River | Shepard: complaint alleged breach of contract (and later obtained purchase agreement) | Sun River: complaint did not state a breach-of-contract claim against broker | Held: Trial court correctly found no viable contract claim pleaded against Sun River |
| Whether leave to amend to add breach-of-written-contract claim should be allowed | Shepard: amendment would relate back / avoid time bar because six-year contract statute would apply | Sun River: amendment was untimely and futile because no viable contract claim existed | Held: Denial of leave to amend affirmed as amendment would be futile/untimely |
| Whether Sun River was entitled to attorney fees under the purchase agreement | Shepard: challenged fee award | Sun River: agreement entitles broker to fees from litigation arising out of the transaction | Held: Fee award to Sun River affirmed (trial court found contractual entitlement) |
Key Cases Cited
- Davis v. Rogers, 128 Wash. 231 (recorded instruments are constructive notice to the world)
- Strong v. Clark, 56 Wn.2d 230 (recording of an instrument can give constructive notice and trigger accrual when all claim elements exist)
- Pickett v. Holland Am. Line-Westours, Inc., 145 Wn.2d 178 (discovery rule can apply to CPA claims)
- In re Estates of Hibbard, 118 Wn.2d 737 (discovery rule applies where injured parties do not or cannot know of their injury)
- O'Neil v. Estate of Murtha, 89 Wn. App. 67 (accrual rule: cause of action accrues when plaintiff can apply to court for relief)
- Hudson v. Condon, 101 Wn. App. 866 (plaintiff must be able to establish each element before the statute begins to run)
- First Md. Leasecorp v. Rothstein, 72 Wn. App. 278 (RCW 4.16.080(4) characterized as a discovery-rule exception to the 3‑year accrual period)