JONATHAN DEEGAN ET AL., Appellants, v. WINDERMERE REAL ESTATE/CENTER-ISLE, INC., ET AL., Respondents.
No. 74353-8-I
Division One
February 21, 2017
197 Wn. App. 875
Beth E. Terrell and Mary B. Reiten (of Terrell Marshall Law Group PLLC); Samuel J. Strauss (of Turrke & Strauss LLP); and Michael D. Daudt (of Daudt Law PLLC) (Craig Briskin, of counsel), for appellants.
Jason T. Dennett, Christopher I. Brain, and James M. Bulthuis (of Tousley Brain Stephens PLLC); and Lars E. Neste (of Demco Law Firm PS), for respondents.
¶2 Deegan and O‘Grady filed a class action complaint under the Consumer Protection Act (CPA),
¶3 Because the listing agents do not establish that Deegan and O‘Grady had a duty to inquire and hypothetical facts, together with the applicable presumption of reliance, support the CPA claim, we conclude the trial court erred in dismissing the CPA claim under CR 12(b)(6).
¶4 Additionally, because Deegan‘s complaint does not resolve when he knew or reasonably should have known the basis for his cause of action, the trial court erred when it concluded his claim is barred by the statute of limitations.
¶5 Therefore, we reverse and remand for further proceedings.
¶6 Jonathan Deegan purchased a home on Whidbey Island in Island County in 2006. The listing agent was RE/MAX Acorn. Alice O‘Grady purchased her home in 2011. The listing agent was Windermere Center-Isle.
¶7 Naval Air Station Whidbey Island consists of a seaplane base and Ault Field. In 1992, the Island County Board of Commissioners (County Board) enacted
The Board of County Commissioners of Island County has considered, among other things, the character of the operations conducted and proposed to be conducted at airports within Island County, the current uses of surrounding property and the uses for which it is adaptable; the Board of County Commissioners finds:
- There exist airports within Island County whose operations may impact the health, safety and general welfare of the citizens of Island County.
- The purpose of this chapter is to protect the public health, safety and general welfare by providing for the full disclo-
sure of the noise associated with the operation of aircraft from the existing airports.2
The
No person shall sell, lease, or offer for sale or lease any property within an airport environs mapped impacted area[ ] unless the prospective buyer or lessee has been given notice substantially as follows: TO: The property at __________ is located within airport environs mapped impacted area. There are currently five (5) active airport facilities in Island County. The Oak Harbor Airpark, the South Whidbey Airpark, and the Camano Airpark are general aviation facilities and are identified on the attached map. Ault Field and OLF [(Naval Outlying Field)] Coupeville are tactical military jet aircraft facilities and are also identified on the attached map. Both Ault Field and OLF Coupeville are used for field carrier landing practice (FCLP) purposes. Practice sessions are routinely scheduled during day and night periods.
Property in the vicinity of Ault Field and OLF Coupeville will routinely experience significant jet aircraft noise. As a result airport noise zones have been identified in the immediate area of Ault Field and OLF Coupeville. Jet aircraft noise is not, however, confined to the boundaries of these zones.
Additionally, the noise generated by the single flyover of a military jet may exceed the average noise level depicted by the airport noise zones and may exceed 100 DBA.3
More specific information regarding airport operation and aircraft noise can be obtained by calling the Community Planning Liaison Office at [Naval Air Station] Whidbey Island and the Island County Planning and Community Development Department.
¶8
second ordinance, the “Noise Level Reduction Ordinance” (NLRO).4 The NLRO is part of the building code and contains noise abatement requirements that apply to any new construction in the affected areas. The NLRO also includes a map with two noise zones. The NLRO disclosure warns potential builders about construction restrictions and requirements in the zoned areas. The
No person shall sell, lease, or offer for sale or lease any property within an airport noise zone 2 or 3 unless the prospective buyer or lessee has been given notice substantially as follows: To:
The Property at __________ is located within Airport Noise Zone 2 or 3 impacted area. Persons on the premises may be exposed to a significant noise level as a result of airport operations. Island County has placed certain restrictions of construction of property within airport noise zones. Before purchasing or leasing the above property, you should consult the Island County Noise Level Reduction Ordinance to determine the restrictions which have been placed on the subject property, if any.
¶9 In 2005, the navy began phasing out EA-6B Prowler jets, replacing them with the EA-18G Growler. “Over the following several years,” community complaints about the jet noise increased.5 Most complaints cited the increase in the frequency of flights, late night and early morning flights, and the increased noise from low flying Growlers.
¶10 A citizens’ group commissioned a 2013 auditory study. According to Deegan and O‘Grady, the noise levels “exceed the levels at which significant adverse health effects have been reported in the scientific literature.”6
¶11 David Wechner, the Island County director of planning and community development, investigated and sent a memorandum to the County Board on December 17, 2013. Wechner noted that frequently used form 22W7 did not include the language required by
¶12 When Deegan and O‘Grady purchased their homes, they received form 22W, containing “a generic airport notice indicating a significant noise level as a result of airport operations,” but not the more extensive disclosures required by
¶13 On November 14, 2014, Deegan and O‘Grady sued the listing agents, alleging their failure to disclose material facts violated Washington‘s CPA.10 Deegan and O‘Grady specifically alleged the omitted information would have impacted their decisions to purchase their homes and their obligations to disclose in any future sale would reduce their proceeds.
¶14 The listing agents moved to dismiss under CR 12(b)(6). The trial court granted that motion and concluded the statute of limitations barred Deegan‘s claim.
¶15 Deegan and O‘Grady appeal.
ANALYSIS
¶16 We review a CR 12(b)(6) dismissal de novo.11 CR 12(b)(6) dismissal is proper where ” it appears beyond doubt that the plaintiff can prove no set of facts, consistent with the complaint, which would entitle the plaintiff to relief.”12 “We regard the plaintiff‘s allegations in the complaint as true, and consider hypothetical facts outside the record.”13 “[A]ny hypothetical situation conceivably raised by the complaint defeats a [CR] 12(b)(6) motion if it is legally sufficient to
I. CPA Claim
¶17 Deegan and O‘Grady contend their complaint states a viable CPA claim. The CPA was adopted to protect the public from unfair or deceptive acts or practices in trade or commerce and is to be liberally construed.16 The CPA significantly differs from traditional common law standards of fraud and misrepresentation. It “replaces the now
largely discarded standard of caveat emptor with a standard of fair and honest dealing.”17
¶18 To prevail on a CPA claim, a plaintiff must show that the defendant engaged in an unfair or deceptive act or practice that occurred in trade or commerce, that affected the public interest, and that injured the plaintiff‘s business or property, and that there is a causal link between the unfair or deceptive act and the injury suffered.18 “An unfair or deceptive act or practice need not be intended to deceive—it need only have ‘the capacity to deceive a substantial portion of the public.’ ”19 A ” [k]nowing failure to reveal something of material importance is “deceptive” within the CPA. ”20
¶19 Causation under the CPA is a factual question to be decided by the trier of fact.21 “[W]here a defendant has engaged in an unfair or deceptive act or practice, and there has been an affirmative misrepresentation of fact, our case law establishes that there must be some demonstration of a causal link between the misrepresentation and the plaintiff‘s injury.”22 The plaintiff must establish that but for the defendant‘s affirmative misrepresentation, the plaintiff
would not have suffered an injury.23 Reliance is one way to establish this causal link.24
¶20 But causation is different for omissions of material fact. This court recognized in Schnall v. AT&T Wireless Services, Inc. that a CPA claim based on an omission of material fact puts the person seeking relief “in the impossible position of proving a negative; that is, that they believed the opposite of the omitted fact when they made their purchase.”25 In view of similar problematic burdens, Washington courts have adopted a rebuttable presumption of reliance for omissions
¶21 Relying heavily on Douglas v. Visser,30 the listing agents argue that Deegan and O‘Grady‘s complaint did not satisfy the “deceptive practice” element of a CPA claim, and that once Deegan and O‘Grady were put on notice of “significant” aircraft noise by form 22W, they had a duty to make further inquiry.31
¶22 In Douglas, an inspector performed an inspection after the Douglases had already made an offer on a house.32 The inspector reported rot and decay near the roof line, caulking that suggested a previous roof leak in the area, water damaged exterior siding, and rot beneath the house.33 The Douglases received the report but did not discuss it with the inspector.34 They sent the Vissers additional questions. The Vissers did not answer. The Douglases purchased the home without further discussion.35 After purchasing the house, the Douglases noticed significant issues with the home, including mold and defects that would cost more to repair than to rebuild.36
¶23 The Douglases sued the Vissers for fraudulent concealment, negligent misrepresentation, breach of real estate agent‘s duties, breach of contract, and violation of the
CPA.37 After a bench trial, the trial court made findings of fact and entered judgment for the Douglases.38 This court held:
Because the Douglases were on notice of the defect and had a duty to make further inquiry, it cannot be said that the defect was unknown to the Douglases, that it could not have been discovered by a reasonable inspection, that the Douglases justifiably relied on the Vissers’ misrepresentations, or that the Vissers committed an unfair or deceptive act that caused the Douglases’ injury.39
¶24 As to their non-CPA claims, this court reasoned the Douglases were on notice of defects and had a duty to make further inquiry because the inspector‘s report identified rot and decay near the roof line, an area of rotted sill plate, and sistered floor joists.40
¶25 The listing agents here argue Douglas imposes a duty of inquiry on Deegan and O‘Grady for purposes of the CPA and supports the CR 12(b)(6) dismissal. We disagree.
¶26 First, in Douglas, the trial court made its findings based on evidence presented at a bench trial, but here, we engage in de novo review of the CR 12(b)(6) dismissal on the pleadings and consistent hypothetical facts. The trial court‘s “findings” that Deegan and O‘Grady had notice of a defect and that they “reasonably should have become aware of the frequency and loudness of the airport operations no
later than a few months after [they] took ownership”42 are superfluous and have no bearing on our de novo review.
¶27 Second, the references in Douglas to notice, knowledge of a defect, duty to make further inquiry, and justified reliance addressed the fraudulent concealment, breach of real estate agent‘s duties, and negligent misrepresentation claims.43 The Douglases’ CPA claim failed because they did not show that the Vissers committed an unfair or deceptive act “that caused the Douglases’ injury.”44 Specifically, the duty to inquire as applied in Douglas is based on fraudulent concealment case law that defects are not actionable if they are apparent or would be disclosed by a careful, reasonable inspection.45 The listing agents provide no compelling authority that the CPA imposes such a duty to inquire.46 Douglas does not stand for the proposition that the CPA imposes a duty of inquiry.
¶28 Third, the alleged unfair or deceptive act here is an omission of the material facts identified in
¶29 Fourth, because causation under the CPA for omission of material facts includes a rebuttable presumption of reliance, we must consider hypothetical facts consistent
¶30 Fifth, the listing agents argue Deegan and O‘Grady cannot establish the public interest element of a CPA claim.50 In essence, they argue (1) the seller disclosure statute,
property provide certain information “at a minimum,”
¶31 Finally, the listing agents do not offer compelling authority to support their other arguments. The alleged omission of material information as required by
disclose material facts. And judicial notice of public documents allowed on CR 12(b)(6) review53 does not extend to nondocumentary general information asserted to be well known in the community.
¶32 Therefore, viewing the alleged omissions of material fact and consistent hypothetical facts, we hold that the complaint adequately alleges an unfair or deceptive act or practice in trade or commerce affecting public interest. The listing agents do not establish a duty of inquiry. And, in view of the rebuttable presumption of reliance applicable to an omission of material fact, there are adequate allegations that the omissions caused Deegan and O‘Grady harm. The trial court erred in
II. Statute of Limitations
¶33 Alternatively, RE/MAX argues, even if Deegan made a prima facie case under the CPA, the statute of limitations barred his claim.
¶34 A plaintiff must bring a CPA claim for damages within four years after the cause of action accrues.54 Generally, a claim accrues “when the party has the right to apply to a court for relief.”55 A party has the right to apply to a court for relief when it ” ‘can establish each element of the action.’ ”56
¶35 The discovery rule of accrual applies where ” ‘injured parties do not, or cannot, know they have been
injured.’ ”57 Under the discovery rule, ” ‘a cause of action accrues when the plaintiff, through the exercise of due diligence, knew or should have known the basis for the cause of action.’ ”58
¶36 RE/MAX contends Deegan‘s claim lapsed because the predicate facts were public knowledge and, therefore, the action accrued when he purchased in 2006. RE/MAX cites Shepard v. Holmes, where Division Three of this court held the purchaser had constructive notice of a consolidation deed and, thus, her misrepresentation and CPA claims accrued at the time of purchase.59 The court reasoned that because the consolidation deed affected title to the property, the plaintiff was on constructive notice of the existence of the consolidation deed when she purchased her property in July 2007, not when she decided to sell in 2011.60
¶37 Unlike Shepard, the question here is when Deegan had knowledge of the omitted disclosures required under
¶38 As alleged in the complaint, it is unresolved when Deegan, through due diligence, knew or should have known the basis for his CPA cause of action.
¶39 Therefore, we reverse and remand for further proceedings.
DWYER and LEACH, JJ., concur.