William Newcomer, T v. Michael Cohen, 48233-9

Michael Cohen (manager/developer) invited William Newcomer to invest in the Apex apartment project; each principal member agreed to contribute $800,000 initial capital for a ~30% interest.
Cohen provided an Offering Introduction describing $350,000 of each manager’s contribution as “deferred equity” (developer overhead/management fees); Newcomer believed and was told his $800,000 would be paid in cash.
Cohen credited $350,000 of deferred management fees to his capital account, executed a $400,000 founder’s-fee contract paid to his construction company, and caused interest-free loans from his affiliate Point Ruston to Apex (including a 2006 loan he later repaid) without full disclosure to Newcomer.
Newcomer made four capital contributions totaling $2,309,552 (2005–2009). He learned of the deferred fee, the $400,000 founder’s fee, and the 2006 Point Ruston loan only during post-2013 investigation and sued in 2014 under the Washington State Securities Act (WSSA).
A jury found Cohen liable under the WSSA for material misrepresentations/omissions connected to each capital contribution, awarded rescissory damages equal to Newcomer’s total contributions, and the trial court entered judgment (including attorney fees) against Cohen and his marital community.

Issue	Plaintiff's Argument (Newcomer)	Defendant's Argument (Cohen)	Held
Whether statute of limitations bars WSSA claim	Discovery occurred in 2013–2014; suit timely filed Jan 2014	Plaintiff was on inquiry notice by 2009; claims time-barred	Jury question; sufficient evidence that suit was timely; verdict stands
Materiality and reliance on misrepresentations/omissions	Form of capital (cash vs non‑cash), undisclosed affiliate loans, and undisclosed founder’s fee were material; Newcomer relied and would not have invested	Omissions not material; contributions in services allowable; no reasonable reliance	Sufficient evidence supported jury finding of materiality and reasonable reliance
Proper measure of remedy (rescission vs damages)	Rescission available because plaintiff may not have truly disposed of securities; alternatively, statutory damages	Only damages appropriate because securities were transferred; rescission not available	Court properly instructed jury on both remedies given conflicting evidence; no error
Liability of marital community	Wife benefited from transactions; community liable	No proof wife liable; judgment against marital community improper and was not submitted to jury	Judgment against marital community affirmed based on evidence of community benefit and liberal construction of verdict

Keck v. Collins, 184 Wn.2d 358 (standards for summary judgment review)
Winbun v. Moore, 143 Wn.2d 206 (inquiry‑notice and discovery questions for jury)
Indust. Indem. Co. of the Nw., Inc. v. Kallevig, 114 Wn.2d 907 (directed verdict/sufficiency standard)
Hines v. Data Line Sys., Inc., 114 Wn.2d 127 (WSSA requires reliance; violation is misrepresentation/omission)
Millies v. LandAmerica Transnation, 185 Wn.2d 302 (jury instructions become law of the case when not objected to)
Stiley v. Block, 130 Wn.2d 486 (standard for reviewing directed verdict denial)
Kappelman v. Lutz, 167 Wn.2d 1 (review of jury instructions)
Christensen v. Munsen, 123 Wn.2d 234 (discretion in giving instructions)
Fergen v. Sestero, 182 Wn.2d 794 (sufficiency of jury instructions)
McRae v. Tahitian, LLC, 181 Wn. App. 638 (entering judgment on a verdict)