WA 02 08 Sammann case

PER CURIAM. Marguerite and Nadene Sammann filed this action in 1994, alleging claims of fraud and breach of a constructive trust that arose, at least in part, from a 1981 transfer of real property. Because the admissible facts in the record are susceptible of but one reasonable conclusion, we affirm the trial court's dismissal of the Sammanns' claims on summary judgment. We also award attorney fees for a frivolous appeal.

Facts

In August 1994, appellants Marguerite and Nadene Sammann (the Sammanns), each filed creditors claims for $50,000,000 against the Estate of Elizabeth Sammann, who had died in April 1994[1] Marguerite Sammann was married to Elisabeth Sammann's son, H. David Sammann, until his death in 1982. Nadene Sammann is the only child of Marguerite and H. David Sammann. After their creditors claims were denied, the Sammanns filed this action for damages against the Estate of Elizabeth Sammann on November 1, 1994.

Respondent Francis Mayer, a nephew of Elizabeth Sammann, is personal representative for the Estate. In their original complaint, the Sammanns alleged that Judson Hines, a family attorney, had made "fraudulent transfers of separate property of Nadene Sammann and Marguerite Sammann" to Elizabeth Sammann prior to her death. In the years following the filing of the complaint, the Sammanns have expanded the scope of their allegations.2[2] In their appellate brief, the Sammanns characterize this action as follows:

This case is about the conversion/theft and concealment of the Sammann fortune by Mayer and his family. The Sammanns are seeking the return of non-probate and probate assets of the Estates of Elizabeth Sammann and Dr. H. David Sammann, as well as community property assets of Marguerite Sammann and Dr. H. David Sammann, and the inheritance of Nadene M. Sammann from Mayer and his family. Sammanns believe the assets in question, non- real estate and real estate assets were wrongfully converted to Mayer and his family before Elizabeth Sammann died and outside her will and that these assets still remain concealed from the Sammanns.

Both Elizabeth and Mayer had a fiduciary duty to Marguerite and Nadene, and transferred non-probate and probate assets they received from Dr. H. David Sammann to their own benefit without the Plaintiffs knowledge or consent. They were acting as Sammann's fiduciaries and, consequently, owed David, his estate, Marguerite and Nadene Sammann an affirmative duty of disclosure. As Mayer and Elizabeth Sammann did not disclose their actions to the Sammanns, they have breached their respective fiduciary duties. Brief of Appellant, at 7, 26.

In the record before this court, the Sammanns have identified one asset that was the subject of alleged improper conduct. In June 1981, H. David Sammann executed a quitclaim deed conveying "his interest" in real property in Bothell to Elizabeth Sammann. The Sammanns characterize this property as the "family farm" and claim that the farm provided eggs and poultry products for a family company "that became the basis for the Sammann fortune." Brief of Appellant, at 7. The Sammanns further allege that following the 1981 conveyance, Elizabeth Sammann held the property in a constructive trust. In January 1984, Elizabeth Sammann executed a deed conveying the family farm to a developer who, the Sammanns allege, constructed "almost 50 homes" on the property.

On March 30, 2001, the Estate and Mayer moved for summary judgment. The trial court granted the motion, concluding that the Sammanns' claims for fraudulent conveyance and breach of a constructive trust were barred by the three-year statute of limitations. See RCW 4.16.080. The court reasoned that the 1981 and 1984 conveyances were matters of public record that constituted actual or constructive notice to the Sammanns of the alleged fraudulent conveyances and breach of constructive trust and that the Sammanns had not sustained their burden of demonstrating that the statute of limitations should be extended by the discovery rule. The court also denied the Sammanns' motion for reconsideration.

Decision

The Sammanns first contend that the trial court erred in concluding that the statute of limitations barred their claims for fraud and for breach of a constructive trust.[3] They argue that material factual issues remain as to when they knew or should reasonably have known of the fraudulent conduct underlying the claims.

When reviewing a grant of summary judgment, an appellate court undertakes the same inquiry as the trial court. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). We consider the evidence and the reasonable inferences therefrom in the light most favorable to the nonmoving party. Schaaf v. Highfield, 127 Wn.2d 17, 21, 896 P.2d 665 (1995). Summary judgment is appropriate "if the pleadings depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." CR 56(c); White v. State, 131 Wn.2d 1, 9, 929 P.2d 396 (1997).

The statute of limitations for fraud is three years and incorporates the discovery rule. See RCW 4.16.080(4); Crisman v. Crisman, 85 Wn. App. 15, 21, 931 P.2d 163 (1997). The limitation period begins to run when the cause of action accrues, i.e., when the aggrieved party actually discovers the facts constituting the fraud. Strong v. Clark, 56 Wn.2d 230, 232, 352 P.2d 183 (1960). Actual knowledge of the fraud will be inferred if the aggrieved party, by the exercise of due diligence, could have discovered it. Strong v. Clark, 56 Wn.2d at 232. Actions based on a constructive trust are also subject to the three-year statute of limitations. Goodman v. Goodman, 128 Wn.2d 366, 373, 907 P.2d 290 (1995). The statute of limitations on a constructive trust action begins to run "when the beneficiary discovers or should have discovered the wrongful act which gave rise to the constructive trust." Goodman, 128 Wn.2d at 373 n.2.

As already indicated, the only asset that the Sammanns have identified to support their claims is the "family farm." The Sammanns allege that H. David Sammann wrongfully or fraudulently conveyed "his interest" in the family farm to Elizabeth Sammann in 1981. The same transfer, if wrongful, would have created the alleged constructive trust and thereby also triggered the limitation period for the Sammanns' constructive trust claim. See Goodman v. Goodman, 128 Wn.2d at 373 n.2.[4] It was undisputed that both the 1981 and 1984 conveyances were recorded and therefore matters of public record. Knowledge that the conveyances had been made would have provided notice of the only specific facts that the Sammanns now allege as the basis for their fraud and constructive trust claims. "When the facts upon which the fraud is predicated are contained in a written instrument which is placed on the public record, there is constructive notice of its contents, and the statute of limitations begins to run at the date of the recording." Strong v. Clark, 56 Wn.2d at 232. Moreover, under the circumstances of this case, the trial court's imposition of constructive notice was also appropriate because "ordinary prudence and business judgment" required examination of the record. See Aberdeen Fed. Sav. & Loan Ass'n v. Hanson, 58 Wn. App. 773, 777, 794 P.2d 1322 (1990). As the trial court noted, Marguerite Sammann participated in the 1980 bankruptcy filing of H. David Sammann and Marguerite Sammann, and Marguerite Sammann is the executrix of her husband's estate. Given the nature of the asset and the Sammanns' claim that they acquired their unspecified interest in it "before any transfers took place," Brief of Appellant, at 24, we agree with the trial court that the exercise of due diligence required a check of the public records after H. David Sammann's death in 1982. See Douglass v. Stanger, 101 Wn. App. 243, 257, 2 P.3d 998, review denied, 142 Wn.2d 1011 (2000) (due diligence required investor to check public records periodically to ascertain status of property).

The Sammanns acknowledge that after the death of H. David Sammann in 1982, they in fact "searched the real estate records thoroughly at the King County and Snohomish County Recorders' offices, and the Assessor's offices" and did not find the transfer. Brief of Appellant, at 11. But they provide no explanation for their inability to find the document upon which they now rely as evidence of fraud. A party who seeks to extend the limitation period because of fraudulent concealment bears the burden of demonstrating "the reasons why the claimant did not know of the cause of action, the means used by the culprits to keep him ignorant, and how he first obtained knowledge of the fraud." Douglass v. Stanger, 101 Wn. App. at 256.

Generally, the question of due diligence is one of fact. Douglass v. Stanger, 101 Wn. App. at 256. But based on the admissible evidence in the record, reasonable minds could only conclude that due diligence would have alerted the Sammanns to the factual basis for their claims more than three years before they filed suit. The trial court properly dismissed their claims for fraud and breach of a constructive trust on summary judgment.

In an effort to demonstrate that there are genuine factual issues remaining as to when they knew or should have known of the alleged fraud, the Sammanns assert, among other things, their "belief" that "the bulk of the Sammann fortune was transferred to Mayer and his family" after H. David Sammann's death, that Elizabeth held a "variety of assets" in trust for them, and that fraudulent concealment of assets is continuing today. But the Sammanns fail to present even a shred of admissible evidence to support these bare allegations. A party cannot defeat a properly supported motion for summary judgment with assertions of "belief." Once the moving party has met its initial burden on summary judgment, the nonmoving party may not rely on the allegations in the pleadings but must set forth specific facts by affidavit or otherwise that show a genuine issue exists. Additionally, any such affidavits must be based on personal knowledge admissible at trial and not merely on conclusory allegations, speculative statements or argumentative assertions.[5]

The Sammanns' allegations of continuing fraud are based on nothing more than argumentative assertions that unresolved factual issues remain.

The Sammanns next contend that the trial court erred in refusing to continue the summary judgment and compel further discovery of alleged fraudulent concealment. The trial court has discretion to continue summary judgment to permit further discovery. See CR 56(f). But the Sammanns have failed to provide any support for their assertion that Mayer and others "have the documents Sammanns seek." Accordingly, they have failed to demonstrate any abuse of discretion in the trial court's discovery rulings. See Janda v. Brier Realty, 97 Wn. App. 45, 54, 984 P.2d 412 (1999).

The Sammanns next contend that the trial court erred in granting their motion for a continuance of summary judgment only on condition that they pay terms of $500. But given the length of time that the Sammanns' action had already been pending, the trial court's ruling was reasonable. The trial court did not abuse its discretion. See Moe v. Wise, 97 Wn. App. 950, 969, 989 P.2d 1148 (1999), review denied, 140 Wn.2d 1025 (2000).

The Sammanns next contend that the trial court abused its discretion in denying their motion for reconsideration and in denying certain of their "counter-motions." But the Sammanns merely repeat arguments that we have already rejected. Accordingly, they have failed to demonstrate any abuse of discretion.

Finally, the Sammanns allege that the trial court made certain erroneous findings regarding a CR 11 violation, the worth of assets, the timeliness of filing dates, the dates of alleged fraudulent transfers, and the deaths of parties with knowledge of material facts. But the challenged findings were not material to the trial court's determination that the Sammanns' claims were barred by the statute of limitations, and the trial court imposed no sanctions for the CR 11 violation. Moreover, because we review a summary judgment de novo, such findings are superfluous and not considered on appeal. See Hill v. Cox, 110 Wn. App. 394, 403, 41 P.3d 495 (2002). The Sammanns have failed to identify any prejudicial error. We agree with the respondents that this appeal is frivolous and award attorney fees on appeal under RAP 18.9(a). An appeal is frivolous "if the appellate court is convinced that the appeal presents no debatable issues upon which reasonable minds could differ and is so lacking in merit that there is no possibility of reversal." In re Marriage of Foley, 84 Wn. App. 839, 847, 930 P.2d 929 (1997). Given the Sammanns' failure to identify with any specificity the acts on which their vague claims of fraud and misconduct are based or submit any relevant supporting evidence, there was no reasonable basis to challenge the summary judgment dismissal. The trial court's judgment is affirmed; the respondents' request for attorney fees on appeal is granted, subject to compliance with RAP 18.1(d).

Footnotes

[1] Although the Sammanns have provided a lengthy account of the family history underlying this action, most of the asserted facts are unsupported by any meaningful reference to the record. See RAP 10.3(a)(4)("Reference to the record must be included for each factual statement").

[2] The Sammanns also allege misconduct by numerous persons who are not parties to this action.

[3] The Sammanns also allege that there are material factual issues as to whether there was a breach of an express trust. See generally Goodman v. Goodman, 128 Wn.2d 366, 373, 907 P.2d 290 (1995). But because the Sammanns fail to identify any facts or evidence that would support such a claim, we decline to consider it.

[4] The trial court concluded that the breach occurred no later than 1984, when Elizabeth Sammann transferred the property to a developer.

[5] Footnote omitted.) Las v. Yellow Front Stores, Inc., 66 Wn. App. 196, 198, 831 P.2d 744 (1992).

Fraud Law Resources for Oregon and Washington

Court of Appeals Division I

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

Facts

Decision