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Clausing v. Zimmar

December 30, 1996

VERNON D. CLAUSING, APPELLANT,
v.
SUZANNE ZIMMAR, RESPONDENT.



Appeal from Superior Court of King County. Docket No: 95-2-00665-5. Date filed: 07/12/95.

Petition for Review Denied May 6, 1997,

Authored by Ann L. Ellington. Concurring: William W. Baker, Pro Tem Judge

The opinion of the court was delivered by: Ellington

ELLINGTON, J. -- On January 10, 1995, Vernon Clausing filed a complaint against Suzanne Zimmar alleging conversion and breach of fiduciary duty occurring in 1984. The trial court dismissed the suit as barred by the statute of limitations. Clausing claims he could not have discovered his cause of action earlier. Because Clausing did not demonstrate due diligence in discovering his cause of action, his claims are time-barred, and we affirm.

Facts

Because this opinion will not be published, we confine our recitation of the facts to those necessary for an understanding of this opinion. See RCW 2.06.040 and RAP 10.4(h).

In the 1970s, Clausing and Robert Worthington formed a partnership (the Partnership), which owned various restaurants. Worthington was the active partner, while Clausing provided financing. Zimmar was married to Worthington for parts of 1983 and 1984, and from 1989 to his death on June 2, 1992. Zimmar worked as Worthington's bookkeeper for a period of time but claims that this role ended in 1979. Clausing originally conceded that Zimmar was only a bookkeeper, but as the case developed, he asserted that she must have been an agent of the Partnership. Clausing has supplied no evidence of agency, however, and refers only to Zimmar's "close relationship" to Worthington and what he categorizes as the circumstantial disappearance of the Partnership's assets.

The Partnership's assets are documented on Clausing's tax returns, which from 1972 through 1984 list between one and five restaurants. After 1984, Clausing declared no Partnership assets on his tax returns. From 1978 to 1984, the returns reference only a single restaurant--known as both Pepe's of Renton and Pepe's Villa. It is the transfer of that restaurant--from the Partnership to Hi-Q Enterprises, Inc., and then from Hi-Q to Hi-Quality House of Pies, Inc.--that forms the basis of this suit. *fn1 Zimmar was a part owner of both Hi-Q and Hi-Quality. Clausing alleges that these transfers were fraudulent and that certain documents (including the transfer documents) bearing his signature were forged. Zimmar alleges they were made with Clausing's knowledge and acquiescence. The last transfer was made in 1984, at which time Pepe's of Renton was sold to a third party and Zimmar retained a restaurant known as Flapjacks.

Clausing claims that he "was not made aware of the [1984 transfer] until six or seven years later[,] when [this information] surfaced during subsequent litigation involving [Zimmar], Worthington, Hi-Quality House of Pies, and other partners." The litigation that Clausing refers to was actually brought only three years later, in 1987. In that action, Clausing, Zimmar, and Hi-Quality were sued for breach of a lease that Zimmar had executed on behalf of Hi-Quality. Clausing was sued as guarantor of that lease. Clausing did not defend, and a default judgment was entered against him on August 3, 1989. He explains that he did not defend because he knew he had not guaranteed the lease:

Affiant [Clausing] further discusses with respect to the [1987 litigation] to what I would have learned had I only read the pleadings[.] The facts of the matter are that I was involved in that case only as an alleged guarantor of an equipment lease to be held by American Discount Corp. When I discovered that that was my only purported involvement and knew that I had never seen Suzanne Zimmar or signed a note, or signed any guarantee for such a lease, I refused to be further involved in the litigation. . . . I took no further part in the case because I knew that I had not signed such a guarantee and had no contact with any of the parties during that period of time. In his brief on appeal, Clausing claims that "any of the documents he allegedly signed in connection with Hi-Quality . . . are forgeries."

After Clausing sued Zimmar in 1995, Zimmar moved for summary judgment, arguing that Clausing's claims were time-barred. Clausing asserted that he did not discover "the Disposition of Partnership properties . . . until the late 1980s or early 1990s[.]" The court granted Zimmar's motion.

Discussion

The question on appeal is whether the court properly granted summary judgment of dismissal under the statute of limitations. Summary judgment is proper only if there are no issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c). Generally, because the statute of limitations is an affirmative defense, the party asserting the protection of the statute bears the burden of proof. Brown v. ProWest Transport Ltd., 76 Wash. App. 412, 419, 886 P.2d 223 (1994) (citing Haslund v. Seattle, 86 Wash. 2d 607, 547 P.2d 1221 (1976)). Where a moving party on summary judgment establishes facts supporting the defense, the burden shifts to the plaintiff to demonstrate why the statute does not require dismissal. See G.W. Constr. v. Professional Serv. Indus., Inc., 70 Wash. App. 360, 367, 853 P.2d 484 (1993), rev. denied, 123 Wash. 2d 1002, 868 P.2d 871 (1994); see Bruns v. Paccar, Inc., 77 Wash. App. 201, 208, 890 P.2d 469, rev. denied, 126 Wash. 2d 1025, 896 P.2d 64 (1995). The reviewing court engages in the same inquiry as the trial court. Failor's Pharmacy v. DSHS, 125 Wash. 2d 488, 493, 886 P.2d 147 (1994).

Clausing's suit is premised on conversion and breach of fiduciary duties; both theories are governed by a three-year statute of limitations. See RCW 4.16.080 (2)(3). Here, the last alleged unlawful act occurred in April 1984, when Zimmar sold Hi-Quality and retained Flapjacks. Therefore, the limitations statute required Clausing to file his action by April 1987. Clausing did not file this action until January 10, 1995. Clausing argues that his late filing should be excused under the discovery rule, which generally tolls the statute of limitations for periods during which a party exercising due diligence could not have discovered the factual basis for its cause of action. See Allen v. State, 118 Wash. 2d 753, 757-58, 826 P.2d 200 (1992); RCW 4.16.080(4). The limitations statute is not tolled, however, after "the fraud should have been discovered, and a clue to the fact which, if followed up diligently, would lead to discovery, is in law equivalent to discovery." Hilton v. Mumaw, 522 F.2d 588, 595 (9th Cir. 1975) (quoting Bay City Lumber Co. v. Anderson, 8 Wash. 2d 191, 211, 111 P.2d 771 (1941)). Thus, Clausing has the burden of showing that had he followed up all known "clues," he still could not have discovered his cause of action until three years ...


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