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Alpacas of America, LLC v. Groome

Court of Appeals of Washington, Division 2

February 4, 2014

Alpacas of America, LLC, Appellant,
v.
Sam Groome et al., Respondents

Oral Argument November 26, 2013.

Appeal from Thurston Superior Court. Docket No: 12-2-00840-7. Date filed: 09/21/2012. Judge signing: Honorable James J Dixon.

Kevin Hochhalter and Jon E. Cushman (of Cushman Law Offices ), for appellant.

James B. Meade II (of Forsberg & Umlauf PS ) and Amanda Mary Alys Searle (of Connelly Law Offices ), for respondents.

AUTHOR: Jill M Johanson, A.C.J. We concur: Thomas R Bjorgen, J., Bradley A. Maxa, J.

OPINION

Johanson, A.C.J.

[179 Wn.App. 393] ¶ 1 Alpacas of America LLC (AOA) appeals the trial court's dismissal of its lawsuit to recover on two promissory notes that Sam and Odalis Groome executed in conjunction with sales contracts. At issue in this appeal is whether the four-year statute of limitations for sales contracts or the six-year statute of limitations for negotiable instruments applies here. The parties agree that the six-year statute applies if the notes qualify as " negotiable instruments" under article 3 of the Washington Uniform Commercial Code (WUCC), Title 62A RCW. We hold that the promissory notes here are negotiable instruments [179 Wn.App. 394] because they contain unconditional promises to pay despite referencing the underlying sales contracts. Accordingly, we

Page 1104

also hold that the six-year statute of limitations applies; reverse the trial court's dismissal of AOA's complaint, which relied on an application of the four-year statute of limitations; and remand for further proceedings consistent with this opinion. Additionally, we reverse the trial court's attorney fees award to the Groomes because they are no longer the prevailing party entitled to attorney fees.

FACTS

¶ 2 The Groomes twice entered into sales contracts with AOA to purchase alpacas, and both times they financed the purchases. First, on January 14, 2006, the Groomes purchased " Phashion Model" and financed $18,750 over four years. Second, on January 13, 2007, they purchased " Black Thunder's Midnight" and financed $20,250. In conjunction with each sales contract, the Groomes executed a promissory note, outlining a payment schedule to satisfy the alpaca purchases. Each promissory note contained a security agreement.

¶ 3 In April 2012, AOA sued the Groomes, alleging that in October 2007, the Groomes stopped making payments and defaulted on the promissory notes. In its complaint, AOA alleged that the Groomes purchased alpacas from AOA pursuant to the sales contracts and promissory notes. AOA attached the 2006 and 2007 sales contracts and promissory notes to its complaint.

¶ 4 The Groomes filed a CR 12(b)(6) motion to dismiss AOA's claim, arguing that the four-year statute of limitations under WUCC article 2 for the sale of goods had expired. AOA argued that its action was on the promissory notes which were negotiable instruments and, therefore, the six-year statute of limitations for negotiable instruments under WUCC article 3 applied.

[179 Wn.App. 395] ¶ 5 The trial court granted the Groomes' CR 12(b)(6) motion, finding that the four-year statute of limitations on WUCC article 2 actions applied here because AOA did not base its action on a negotiable instrument. The trial court reasoned that the promissory notes were not negotiable instruments because they enforced the sales contracts, the sales documents all referenced one another, the Groomes signed the contracts and promissory notes at the same time in conjunction with one another, and AOA attached both the contracts and promissory notes to its complaint. The trial court ultimately found that the sales contracts and promissory ...


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