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Deegan v. Windermere Real Estate/Center-Isle, Inc.

Court of Appeals of Washington, Division 1

February 21, 2017

JONATHAN DEEGAN and ALICE O'GRADY, on behalf of themselves and others similarly situated, Respondent,
v.
WINDERMERE REAL ESTATE/ CENTER-ISLE, INC., a Washington corporation; ACORN PROPERTIES, INC., d/b/a RE/MAX ACORN, INC., a Washington corporation, Appellant.

          VERELLEN, C.J.

         When Jonathan Deegan and Alice O'Grady purchased their Whidbey Island homes, Windermere Center-Isle and RE/MAX Acorn (listing agents) provided Deegan and O'Grady limited warnings of airport noise, but not the extensive warnings required by Island County Code (ICC) 9.44.050.

         Deegan and O'Grady filed a class action complaint under the Consumer Protection Act, (CPA) ch. 19.86 RCW, alleging the listing agents engaged in unfair or deceptive acts by omitting the detailed warnings required by ICC 9.44.050. The trial court granted the listing agents' CR 12(b)(6) motion to dismiss, concluding Deegan and O'Grady had a legal duty to inquire and the statute of limitations had run on Deegan's claim.

         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 CR12(b)(6).

         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.

         Therefore, we reverse and remand for further proceedings.

         FACTS[1]

         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.

         Naval Air Station Whidbey Island consists of a seaplane base and Ault field. In 1992, the Island County Board of Commissioners (County Board) enacted ICC 9.44.050, requiring sellers and their agents to provide buyers with specific warnings about aircraft noise. The legislative purpose focuses on the health, safety, and welfare of citizens:

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:
A. There exist airports within Island County whose operations may impact the health, safety and general welfare of the citizens of Island County.
B. The purpose of this chapter is to protect the public health, safety and general welfare by providing for the full disclosure of the noise associated with the operation of aircraft from the existing airports.[2]

The ICC 9.44.050 disclosure statement provides:

No person shall sell, lease, or offer for sale or lease any property within an airport environs mapped 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 5 (five) 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 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 NAS Whidbey Island and the Island County Planning and Community Development Department.[4]

         ICC 9.44.060 states, "The obligation to comply with the provisions of this chapter [is] upon the property owner and their agents." In 1993, the County Board passed a second ordinance, the Noise Level Reduction Ordinance (NLRO).[5] 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 NLRO's disclosure statement, ICC 14.01 B- 100, provides:

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 Island County Noise Level Reduction Ordinance to determine the restrictions which have been placed on the subject property, if any.

         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.[6] Most complaints cited the increase in the frequency of flights, late night and early morning flights, and the increased noise from low flying Growlers.

         A citizen's 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."[7]

         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 22W[8] did not include the language required by ICC 9.44.050. Form 22W also did not include the airport environs map showing locations of the aircraft facilities and the impacted areas.[9]

         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 ICC 9.44.050.[10]

         On November 14, 2014, Deegan and O'Grady sued the listing agents, alleging their failure to disclose material facts violated Washington's CPA.[11] Deegan and O'Grady specifically alleged the omitted information would have impacted their decision to purchase their homes and their obligation to disclose in any future sale would reduce their proceeds.

         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.

         Deegan and O'Grady appeal.

         ANALYSIS

         We review a CR 12(b)(6) dismissal de novo.[12] 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."'[13] "We regard the plaintiff's allegations in the complaint as true and consider hypothetical facts outside the record."[14] "Any hypothetical situation conceivably raised by the complaint defeats a CR 12(b)(6) motion if it is legally sufficient to support plaintiffs claim."[15] Because de novo review is based on the complaint and hypothetical facts, findings of fact by the trial court are superfluous.[16]

         I. CPA Claim

         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.[17] 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."[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, injured the plaintiff's business or property, and that there's a causal link between the unfair or deceptive act and the injury suffered.[19] "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.'"[20] A "knowing failure to reveal something of material importance is 'deceptive' within the CPA."[21]

         Causation under the CPA is a factual question to be decided by the trier of fact.[22]"[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 plaintiffs injury."[23] The plaintiff must establish that, but for the defendant's affirmative misrepresentation, the plaintiff would not have suffered an injury.[24] Reliance is one way to establish this causal link.[25]

         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."[26] In view of similar problematic burdens, Washington courts have adopted a rebuttable presumption of reliance for omissions of material fact in franchise fraud[27] and securities fraud cases.[28] "While the Washington Supreme Court has never affirmed a presumption of reliance in consumer fraud cases involving material omissions, it has acknowledged that reliance is 'virtually impossible to prove' in cases involving nondisclosure of material facts."[29] Federal cases discussing the CPA acknowledge a rebuttable presumption of reliance for material omissions.[30]

         Relying heavily on Douglas v. Visser, [31] 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.[32]

         In Douglas, an inspector performed an inspection after the Douglases had already made an offer on a house.[33] 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.[34] The Douglases received the report but did not discuss it with the inspector.[35] They sent the Vissers additional questions. The Vissers did not answer. The Douglases purchased the home without further discussion.[36] After purchasing the ...


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