Business Finance Corp., Resp. v. Victoria Knoll, Apps.

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
BUSINESS FINANCE CORP., a No. 73407-5-I
Washington corporation,
Respondent,
DIVISION ONE
VICTORIA KNOLL, THE ESTATE OF UNPUBLISHED OPINION
CRAIG KNOLL; THE UNKNOWN
HEIRS OF CRAIG KNOLL, deceased;
CONSTRUCTION MATERIALS INC.,
NORTHWEST, an inactive Washington
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Corporation; TRUSERV CORP., a Z^Cl
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Delaware corporation; JERRY V. KNOLL
Individually, and the MARITAL
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COMMUNITY OF JERRY V. AND JANE PO 1-^-*
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DOE KNOLL; KNOLL GREENWATER 3>-3
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LLC, a Washington limited liability "Tg ZK. 'y>
company; STATE OF WASHINGTON, • •
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DEPARTMENT OF REVENUE, STATE f"> O —
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OF WASHINGTON, DEPARTMENT OF
LICENSING; INTERNAL REVENUE
SERVICE OF THE UNITED STATES OF
OF AMERICA and JOHN DOES 1-25,
Appellants. FILED: May 23. 2016
Spearman, J. — Jerry Knoll appeals the trial court's ruling that Business
Finance Corporation (BFC) has the right to foreclose on real property owned by
the Estate of Lorna Knoll. He asserts that the trial court erred in finding that the
No. 73407-5-1/2
Estate was a grantor under the deed of trust and in concluding that the deed was
valid and enforceable. Finding no error, we affirm.
FACTS
Lorna Knoll and her sons Craig and Jerry1 owned four parcels of
recreational property in Greenwater, Washington. The properties are referred to
in this action as parcels A, B, C, and D. Lorna owned several other properties
and also owned a substantial share of the family business, Knoll Lumber and
Hardware. Craig served as the chief executive officer of Knoll Lumber and
managed its operations. Jerry lived in Alaska. He owned a portion of Knoll
Lumber but did not have an active role in the family business.
Lorna died in 1998. Lorna's will named Craig and Jerry co-executors of
her estate. The will specified that if either co-executor was unable or ceased to
act the other was to act as sole executor. Craig and Jerry submitted Lorna's will
to probate and were appointed co-personal representatives of her estate.2 Craig
acted as the primary manager of the estate. The estate remained open for the
next several years.
Lorna's estate owned 64 percent of Greenwater parcels A and B and 100
percent of parcel D. Her will devised this interest to Craig and Jerry in equal
shares. Craig and Jerry each owned 18 percent of parcels A and B. Craig and his
wife Victoria owned 100 percent of parcel C. Parcel C is not at issue in this case.
1 We refer to members of the Knoll family by their first names to avoid confusion. No
disrespect is intended.
2 In the context of this case, the terms "executor" and "personal representative" are
interchangeable. Both apply to the person or persons appointed to administer an estate. RCW
11.02.005(4).
No. 73407-5-1/3
In 1999, Craig obtained financing for Knoll Lumber from BFC. Under a
loan and security agreement, BFC agreed to advance up to $1.5 million to Knoll
Lumber. Craig and Victoria personally guaranteed the loan. They granted BFC a
security interest in their personal residence and in several other properties,
including Greenwater parcels A, B, C, and D. The properties securing the loan
are listed in an attachment to the loan agreement. Some of the listed properties
were owned entirely by Craig and Victoria while others were owned in whole or in
part by Lorna's estate.
As further collateral under the loan agreement, Craig and Victoria
executed deeds of trust. The first paragraph of the deed of trust encumbering the
Greenwater parcels states that the deed is executed by "CRAIG T. KNOLL and
VICTORIA W. KNOLL, husband and wife, as to Parcel C and their undivided
interest in Parcels A, B and D " Clerk's Papers (CP) at 30. The deed states
that the grantors "hereby bargain, sell and convey" parcels A, B, C, and D to
BFC. The signature block at the end of the deed identifies "The Estate of Lorna
L. Knoll" as a grantor. The language following Craig's signature states that he
signed as "Personal Representative of the Estate of Lorna L. Knoll and
Individually." CP at 34.
Knoll Lumber filed bankruptcy in March 2000. The business had no assets
and the bankruptcy was abandoned. Craig and Victoria, as personal guarantors
of Knoll Lumber's obligation, executed two promissory notes to BFC. The
promissory notes were secured by the previously executed deeds of trust. Craig
No. 73407-5-1/4
and Victoria defaulted on the promissory notes and declared bankruptcy in
December 2001.
Jerry brought an adversary action against Craig and Victoria in bankruptcy
court. Jerry asserted that Craig, with Victoria's help, had fraudulently transferred
property belonging to Lorna's estate and breached fiduciary duties to the estate.
Jerry sought an accounting, an injunction prohibiting Craig from transferring
further estate property, and payment of his portion of Lorna's estate.
In their answer to Jerry's complaint, Craig and Victoria alleged that they
had fully informed Jerry of the transactions with BFC and Jerry did not object.
Craig and Victoria asserted that they had encumbered only their own property or
property they had authority to encumber. They also alleged that Jerry had
neglected and abandoned any role in managing Lorna's estate.
Jerry settled with Craig and Victoria in June 2002. Under the settlement,
the parties agreed that Lorna's estate owned Greenwater parcels A and B. Craig
and Victoria agreed to remove all encumbrances from those parcels and transfer
them to a limited liability company (LLC) in which Craig and Jerry would own
equal shares. The settlement was later amended to include parcel D.
Craig died soon after reaching the settlement with Jerry. At the time of his
death, Lorna's estate was still open. The Greenwater parcels were still
encumbered and had not been transferred into an LLC.
BFC pursued litigation against Victoria seeking payment on the obligation.
BFC and Victoria reached a settlement agreement that was approved by the
bankruptcy court in March 2003. The agreement discounted Victoria's total
No. 73407-5-1/5
obligation to BFC and set new interest and repayment terms. Victoria filed a plan
of reorganization with the bankruptcy court in July 2003. The plan allowed
Victoria seven months to market various pieces of real property and pay her debt
to BFC from the proceeds. If not paid within seven months, BFC had the right to
foreclose against the secured properties.
Victoria paid BFC a portion of her debt and in May 2004 the bankruptcy
court set her obligation to BFC at $162,182.61. BFC received a payment of
$10,000 in May 2004 and a payment of $32,800 in January 2005.
BFC received no payments after January 2005.
In May 2010, BFC brought this action to foreclose on Craig's interest in
the Greenwater parcels and on the estate's 64 percent interest in parcels A and
B and 100 percent interest in parcel D. Jerry defended, arguing that BFC did not
have the right to foreclose on property owned by Lorna's estate. The case
proceeded to a bench trial in December 2014. The dispute turned on whether
Lorna's estate was a grantor under the deed of trust and, if so, whether Craig
had authority to encumber estate property without the consent of Jerry as co-
personal representative.
BFC argued that Lorna's estate was a grantor. In addition to the language
of the deed and the related loan agreement, BFC relied on the pleadings in the
adversary action between Craig and Jerry. BFC further argued that Craig was
authorized to act as sole personal representative of the estate because Jerry was
not a Washington resident and had never appointed a resident agent.
No. 73407-5-1/6
Jerry argued that Lorna's estate was not a grantor under the deed of trust.
He argued that the plain language of the deed indicated that Jerry assigned only
his own interest. He also argued that, even if Craig intended to pledge estate
property, he had no authority to do so without Jerry's approval as co-personal
representative.
As support, Jerry relied on the deed of trust conveying another estate
property to BFC. The Monroe Farm deed, which was executed about the same
time as the Greenwater deed, identifies the Estate of Lorna Knoll as a grantor in
the first paragraph and is signed by both Craig and Jerry as co-personal
representatives. Jerry argued that the Monroe deed demonstrates that BFC was
aware that Craig was only one of two co-personal representatives and that Craig
lacked authority to pledge estate property without Jerry's consent. Jerry also
contended that BFC's claim was time barred. He argued that the three-year
statute of limitations applied because BFC introduced parol evidence to prove an
essential term of the contract.
At the close of evidence, Jerry moved to dismiss, arguing that BFC's
action was time barred even under the six-year statute of limitations. Jerry
argued that BFC did not present sufficient evidence to prove that Victoria
voluntarily made a payment in January 2005 and thus tolled the statute of
limitations. The trial court denied the motion.
The trial court found that the estate was a grantor under the deed of trust.
The court concluded that Craig was the only qualified personal representative of
Lorna's estate and that his signature as personal representative was legally
No. 73407-5-1/7
sufficient to bind the estate. The court also concluded that the six-year statute of
limitations applied and BFC's claim was not time barred. The court thus ruled that
BFC had the right to foreclose on the estate's interest in parcels A, B, and D.
Jerry appeals.
DISCUSSION
Jerry challenges the trial court's finding that Lorna's estate was a grantor
under the deed of trust. We review findings of fact for substantial evidence and
review conclusions of law de novo. Sunnvside Valley Irr. Dist. v. Dickie, 149
Wash. 2d 873, 879-80, 73 P.3d 369 (2003). Interpretation of a deed of trust is a
mixed question of fact and law. Niemann v. Vaughn Community Church, 154
Wash. 2d 365, 374, 113 P.3d 463 (2005). In construing a deed, our aim is to give
effect to the intent of the parties. Id. (citing Harris v. Ski Park Farms, Inc., 120
Wash. 2d 727, 739, 844 P.2d 1006 (1993)). The intent of the parties is a question of
fact, the legal consequences of that intent are a question of law. ]d_, (citing Veach
v. Culp, 92 Wash. 2d 570, 573, 599 P.2d 526 (1979)). If the language of the deed is
ambiguous, we may consider extrinsic evidence to determine the parties' intent.
Id,
Jerry argues that the trial court drew a conclusion of law in determining
that Lorna's estate was a grantor. But whether Lorna's estate was a grantor is a
question of fact that depends on the intent of the parties. To answer that
question, the trial court looked to the language of the deed of trust and extrinsic
evidence. The trial court properly characterized the ruling as a finding of fact. We
review the trial court's finding for substantial evidence.
No. 73407-5-1/8
The first paragraph of the deed of trust does not identify Lorna's estate as
a grantor:
THIS DEED OF TRUST, made this 1st day of Sept., 1999,
between CRAIG T. KNOLL and VICTORIA W. KNOLL, husband
and wife, as to Parcel C and their undivided interest in Parcels
A, B, and D, GRANTORS, ..., and BUSNESS [sic] FINANCE
CORPORATION, a Washington corporation, BENEFICIARY....
CP at 30. The deed states that the grantors "hereby bargain, sell and convey"
parcels A, B, C, and D to BFC. CP at 30. The signature block at the end of the
document identifies Lorna's estate as a grantor:
"GRANTORS"
THE ESTATE OF LORNA L. KNOLL
By: s/
Craig T. Knoll
Its: Personal Representative of the Estate of
Lorna L. Knoll and Individually
s/
Victoria W. Knoll, Individually and as
spouse of Craig T. Knoll
CP at 34.
The language of the deed supports the trial court's finding that Lorna's
estate was a grantor. The signature block identifies Lorna's estate as a grantor.
The deed describes Craig as signing both in his personal capacity and as
personal representative of the estate. In addition, the deed grants BFC an
interest in parcel D, which was owned entirely by Lorna's estate.
The record also included the extrinsic evidence produced by both parties.
Jerry produced the Monroe Farm deed in support of his argument that Lorna's
estate was not a grantor under the Greenwater deed. But BFC produced the loan
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No. 73407-5-1/9
agreement, which lists the Greenwater parcels, including parcel D, among the
collateral for the loan. BFC also relied on the pleadings in the adversary action
between Craig and Jerry, which indicate that both brothers understood that Craig
granted BFC a security interest in estate property.
There was conflicting evidence before the trial court. But the language of
the deed of trust, the loan agreement, and the pleadings in the action between
Jerry and Craig support BFC's argument that Craig as personal representative
pledged estate property as security for the BFC loan. We conclude that
substantial evidence supports the trial court's finding that Lorna's estate was a
grantor.
Jerry next argues that, even if Lorna's estate was a grantor under the
deed of trust, the deed is not enforceable because Craig did not have authority to
pledge estate property without Jerry's consent as co-personal representative.
The trial court concluded as matters of law that Jerry was not a qualified co-
personal representative of Lorna's estate, Craig was authorized to act without
Jerry's consent, and the deed was valid. We review conclusions of law de novo.
Sunnvside Valley, 149 Wash. 2d at 879-80.
Co-personal representatives of a nonintervention estate are subject to the
same laws as co-trustees. RCW 11.68.095. One co-trustee alone may not
encumber trust property unless the other co-trustee consents or delegates his
power. RCW 11.98.070; Cornett et al. v. West, 102 Wash. 254, 261, 173 P.44
(1918). A person who is not an in-state resident may be appointed as personal
No. 73407-5-1/10
representative "if [he] appoints an agent who is a resident of the county where
such estate is being probated..., upon whom service of all papers may be made
. . . ."RCW 11.36.010(6).
The parties dispute whether Jerry was qualified to act as personal
representative of Lorna's estate. BFC argues that, because Jerry was not a
Washington resident and did not appoint a resident agent, he was never qualified
to act as co-personal representative. Jerry does not dispute that he was at all
times a resident of Alaska, but he argues that residence in Washington is only a
condition of appointment, not a qualification for serving as a personal
representative. Jerry also argues that because service of all papers could be
made on Craig, Jerry's status as a nonresident was not relevant. RCW
11.36.010(6).
This dispute turns on interpretation of RCW 11.36.010 and related
statutes. We review questions of statutory interpretation de novo. Pham v.
Corbett, 187 Wash. App. 816, 831, 351 P.3d 214 (2015) (citing State v. Wentz, 149
Wash. 2d 342, 346, 68 P.3d 282 (2003). In interpreting statutes, our aim is to
discern and implement the Legislature's intent. |o\ (citing State v. J.P., 149
Wash. 2d 444, 450, 69 P.3d 318 (2003)). Legislative intent may be discerned from
the statutory scheme as a whole. ]d_. (citing Dep't of Ecology v. Campbell &
Gwinn, LLC, 146 Wash. 2d 1, 11, 43 P.3d 4 (2002)).
RCW 11.36.010 addresses qualifications for serving as personal
representative. Under the statute, minors, persons of unsound mind, and persons
convicted of a felony or a crime of moral turpitude are not qualified to act as
10
No. 73407-5-1/11
personal representative. RCW 11.36.010(1). The statute instructs the court to
revoke the appointment of any personal representative who becomes disqualified
by becoming of unsound mind or being convicted of a serious crime. RCW
11.36.010(5). Subsection (6) addresses the appointment of a person who is not a
resident of the state:
(6) A nonresident may be appointed to act as personal
representative if the nonresident appoints an agent who is a resident
of the county where such estate is being probated or who is an
attorney of record of the estate, upon whom service of all papers
may be made; such appointment must be made in writing and filed
by the clerk with other papers of such estate;...
By stating that a nonresident may act as personal representative jf he or
she appoints a resident agent, subsection (6) creates a condition under which a
nonresident may act as personal representative. RCW 11.36.010 does not
specifically identify failure to comply with the resident agent requirement of
subsection (6) as a disqualification. But the conditional language of the
subsection and the location of the subsection in a statute that address
qualifications indicate that a nonresident who does not comply is not qualified.
Related statutes support this reading. An "executor" under the probate
code is a "personal representative." RCW 11.02.005(4). In describing the
qualifications of an executor, RCW 11.28.040 refers to absence from the state as
a "disqualification." Compliance with RCW 11.36.010(6) is necessary for a
nonresident to "qualify" as an executor:
If the executor be a minor or absent from the state, letters of
administration with the will annexed shall be granted, during the
time of such minority or absence, to some other person unless
there be another executor who shall accept the trust, in which
case the estate shall be administered by such other executor
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No. 73407-5-1/12
until the disqualification shall be removed, when such minor,
having arrived at full age, or such absentee, having returned,
shall be admitted as joint executor with the former, provided a
nonresident of this state may Qualify as provided in RCW
11.36.010.
RCW 11.28.040 (emphasis added). Under RCW 11.28.040, absence from the
state is a "disqualification" and a nonresident must appoint a resident agent as
stated in RCW 11.36.010(6) to "qualify." Reading the statutes together, we
conclude that RCW 11.36.010(6) creates a qualification that a nonresident must
meet in order to serve as a personal representative.
We conclude that, because Jerry was a nonresident and he did not
comply with the requirement to appoint a resident agent, Jerry was not qualified
to act as personal representative. But Jerry argues that any lack of qualification is
moot because the probate court appointed him to act as personal representative.
He argues that once appointed by the court a personal representative retains his
authority until removed by the court.
Jerry relies on RCW 11.28.250, which instructs the court to remove a
personal representative who is "permanently removed from the state." But RCW
11.28.040, quoted above, provides that when an executor is absent from the
state the other executor may administer the estate until the out of state person
returns.
Similarly, RCW 11.28.050 addresses the authority of a remaining executor
when a co-executor is not qualified to act. The statute provides that:
[w]hen any of the executors named shall not qualify or having
qualified shall become disgualified or be removed, the remaining
executors shall have the authority to perform every act and
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No. 73407-5-1/13
discharge every trust required by the will, and their acts shall be
effectual for every purpose.
RCW 11.28.050 (emphasis added). The statute confers authority on the
remaining executors to act without participation of a co-executor who is removed
or disqualified. Use of the word "or" indicates that disqualification, without
removal by the court, suffices to allow a remaining executor to act independently.
This provision is not consistent with Jerry's argument that, once appointed, a
personal representative retains authority until removed by the court.
Jerry asserts that RCW 11.28.050 applies only to co-executors who have
not been appointed by the probate court or who, having been appointed, are
subsequently removed. Reply Brief at 6. But this reading ignores the plain
language of the statute, which addresses co-executors who, "having qualified,"
either "become disqualified" or are "removed." Jerry also argues that a
disqualified co-executor must retain authority until removed by the probate court
to avoid uncertainty concerning who is authorized to administer the estate. But
because the language of RCW 11.28.050 is clear and unambiguous we enforce
the statute as written. Cerrillo v. Esparza, 158 Wash. 2d 194, 201, 142 P.3d 155
(2006). We conclude that under RCW 11.28.050 a qualified co-executor is
authorized to act on behalf of the estate when a co-executor becomes
disqualified even if the court has not acted to remove the disqualified co-
executor.
Jerry next asserts that BFC is making an impermissible collateral attack
on the probate court's order appointing him as personal representative. He
argues that BFC could have challenged Jerry's appointment in probate court but
13
No. 73407-5-1/14
is precluded from challenging Jerry's authority as personal representative here.
Reply Brief at 8-10.
Jerry relies primarily on Anderson v. Anderson, 52 Wash. 2d 757, 761, 328
P.2d 888 (1958), which states that a court order "is not open to contradiction or
impeachment by parties or privies by a collateral attack . .. ." (Quoting Baskin v.
Livers. 181 Wash. 370, 374, 43 P.2d 42 (1935)). But the collateral attack doctrine
is not applicable in this case. BFC's first dealings with the Knoll family occurred
over a year after Jerry's appointment as co-personal representative. BFC was
thus not a party to the order appointing Jerry and not in privity with any of the
parties to the order.
Jerry also argues that collateral estoppel bars BFC from challenging
Jerry's authority as personal representative. Jerry asserts that, because BFC
was aware that Jerry was a co-personal representative and did not challenge his
appointment in probate court, it is estopped from asserting the challenge here.
Jerry relies on Hackler v. Hackler, 37 Wash. App. 791, 683 P.2d 241 (1984). In that
case, this court held that a person "who was a witness in an action, fully
acquainted with its character and object and interested in its results, is estopped
by the judgment as fully as if he had been a party." Id. at 795 (quoting Bacon v.
Gardner, 38 Wash. 2d 299, 229 P.2d 523 (1951), Hackler is inapposite because
BFC was not a witness to the action appointing Jerry as co-personal
representative or involved with the action in any manner. Collateral estoppel
does not apply to bar BFC's claim.
14
No. 73407-5-1/15
Jerry next argues that the trial court erred in dismissing his statute of
limitations defenses. He first challenges the trial court's conclusion that the six-
year statute of limitations applies in this case. A six-year statute of limitations
applies to actions on written agreements, including deeds of trust and promissory
notes. Walckerv. Benson and McLaughlin, P.S., 79 Wash. App. 739, 741, 904 P.2d
1176 (1995) (citing RCW 4.16.040). A three-year statute of limitations applies to
actions on oral agreements. RCW 4.16.080(3).
For the six-year statute of limitations to apply, a written agreement "must
contain all the essential elements of the contract." Bogle & Gates. P.L.L.C. v.
Zapel, 121 Wash. App. 444, 449, 90 P.3d 703 (2004) (quoting Bogle & Gates,
P.L.L.C. v. Holly Mountain Resources. 108 Wash. App. 557, 560, 32 P.3d 1002
(2001)). The essential elements of a contract are subject matter, parties,
promise, terms and conditions, and in some jurisdictions, price. Id. The party
asserting a contract must also prove a "mutual intention on the part of the parties
to contract with each other." Ross v. Ravmer, 32 Wash. 2d 128, 137, 201 P.2d 129
(1948) (citing Trover v. Fox, 162 Wash. 537, 298 P. 733 (1931)).
If a written contract does not contain an essential element and parol
evidence is necessary to establish that element, the contract is partly oral and
the three-year statute of limitations applies. Zapel, 121 Wash. App. at 449. But
"[p]arol evidence admitted to interpret the meaning of what is actually contained
in a contract does not alter the terms contained in the contract." DePhillips v. Zolt
Const. Co., Inc., 136 Wash. 2d 26, 32, 959 P.2d 1104 (1998). The use of parol
15
No. 73407-5-1/16
evidence to interpret written terms does not remove a written contract from the
six-year statute of limitations. Id.
Jerry argues that BFC introduced parol evidence to prove that the estate
was a grantor. But here, the writing of the deed of trust identified the grantors in
the first paragraph and in the signature block. The parties introduced parol
evidence to interpret that writing, not to supply a missing element.
Similarly, Jerry argues that BFC relied on parol evidence to prove the
intent of the contracting parties. He asserts that mutual intention is an essential
element, and BFC's use of parol evidence to prove intent removes the action
from the six-year statute of limitations. Jerry relies on Zapel, in which this court
stated that a person asserting a contract "must prove each essential fact,
including the existence of a mutual intention." Bogle & Gates, P.L.L.C,121 Wn.
App. at 449 (quoting Zapel, 108 Wash. App. at 560).
Jerry confuses two distinct issues. The existence of a mutual intention to
enter into a contract is an essential element. Ross, 32 Wash. 2d at 137. But the
intent of the parties as to written terms is a question of interpretation, and
resorting to parol evidence to resolve that issue does not remove a written
contract from the six-year statute of limitations. DePhillips, 136 Wash. 2d at 32. We
conclude that the six-year statute of limitations applies.
Jerry next argues that BFC's claim was time barred even under a six-year
statute of limitations. When at least one payment has been made on a contract
obligation, the statute of limitations begins to run from the last payment, provided
that the payment was voluntarily made "'by the party against whom the payment
16
No. 73407-5-1/17
is invoked as tolling the statute.'" Sanders v. Brown, 123 Wash. 611, 612, 212 P.
1070 (1923) (quoting J. M. Arthur & Co. v. Burke, 83 Wash. 690. 145 P. 974
(1915)). See RCW 4.16.270. The burden of proving that a voluntary payment
was made rests on the party seeking to extend the statute of limitations.
Wickwire v. Reard, 37 Wash. 2d 748, 751 226 P.2d 192 (1951) (citing J. M. Arthur &
Co., 83 Wash. 690).
Jerry challenges the trial court's findings of fact concerning the payment
received in 2005. He argues that the trial court erred in finding that Victoria made
a voluntary payment on the loan obligation in January 2005 because BFC did not
prove that Victoria, and not someone other than her, had made the payment.
The record included evidence that Knoll Lumber went bankrupt, had no
corporate assets, and the bankruptcy was abandoned. After the demise of Knoll
Lumber, BFC dealt with Craig and Victoria and entered into settlements with
them. After Craig's death in 2002, all of BFC's dealings were with Victoria. BFC
entered into a settlement agreement with Victoria. The bankruptcy court
approved a plan of reorganization requiring Victoria to pay BFC from the
proceeds of properties owned by Victoria. Victoria made payments to BFC in
2003 and 2004. BFC's president testified that the money paid on the Knoll
Lumber obligation in 2005 was obtained from the proceeds of a sale of real
property. The only evidence before the court was that Victoria made payments
on the Knoll Lumber obligation to BFC and that Victoria was selling property in
order to satisfy the debt to BFC. There was no evidence that any other person
17
No. 73407-5-1/18
undertook these obligations. We conclude that substantial evidence supports the
trial court's finding that Victoria made the 2005 payment to BFC.
Jerry next argues that BFC's action is based on Victoria's obligation under
the two promissory notes. He argues that the consolidation of the debt by the
bankruptcy court is irrelevant because the two promissory notes were never
merged. Jerry asserts that even if Victoria made a payment in 2005, that
payment applied to only one promissory note and the other promissory note was
outside the statute of limitations.
This argument is without merit because the 2003 settlement agreement is
a subsequent contract that subsumes the previous notes. Although the
settlement does not explicitly state that it replaces or merges the promissory
notes, it sets Victoria's obligation to BFC and establishes new interest and
payment terms. "[T]he legal effect of a subsequent contract made by the same
parties and covering the same subject matter, but containing inconsistent terms,
rescinds the earlier contract." In re Estate of Wimberlev, 186 Wash. App. 475, 505,
349 P.3d 11 (2015) (citing Higgins v. Stafford. 123 Wash. 2d 160, 165-66, 866 P.2d
31 (1994) rev. denied. 183 Wash. 2d 1023, 355 P.3d 1153 (2015).
We conclude that the trial court did not err in rejecting Jerry's statute of
limitations defenses. The six-year statute of limitation applied, the statute was
tolled until January 2005, and BFC's action was timely.
The trial court did not err in ruling that BFC was entitled to foreclose on the
portion of the Greenwater parcels owned by Lorna's estate. Substantial evidence
supports the trial court's finding that the estate was a grantor under the deed of
18
No. 73407-5-1/19
trust. And the trial court properly concluded as a matter of law that, because
Jerry was not qualified to act as co-personal representative of Lorna's estate,
Craig was authorized to act as sole personal representative. The deed signed by
Craig as personal representative of the estate is valid and BFC's action is not
barred by the statute of limitations.
Affirm.
WE CONCUR:
)*,6/A^>
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19