* David R. Duncan v. Lawrence Arata, et al

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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
DAVID R. DUNCAN, as Trustee of the
John and Grace Arata 2004 Trust,
Appellant,
v.
LAWRENCE ARATA, Individually and
as Successor Trustee of the Gary Jay Arata
Trust, or his Successor in Trust; Marie
Arata, Individually as to her separate
Property and as Personal Representative of
the Estate of Gary Jay Arata, Deceased;
and Laura Joanne Arata; Also all other
persons or parties unknown claiming any
right, title, estate, lien or interest in the
real estate described in the Complaint
herein,
Respondents.
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No. 40247-9-III
PUBLISHED OPINION
LAWRENCE-BERREY, C.J. — David Duncan, trustee of the John and Grace Arata
2004 Trust, creditor, appeals the trial court’s summary judgment order dismissing his
mortgage foreclosure action against real property owned by Marie Arata and Lawrence
Arata, as trustee of the Gary Jay Arata Trust (GJA Trust), debtors. The question on
appeal is whether a debtor communicated to the creditor an “acknowledgment” of the
debt so as to restart the statute of limitations. Viewing the evidence in the light most
favorable to Duncan, including all reasonable inferences, we conclude there is a genuine
issue of material fact. We reverse the trial court’s summary judgment order and remand
FILED
MAY 29, 2025
In the Office of the Clerk of Court
WA State Court of Appeals, Division III
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for further proceedings.
FACTS
John Arata and Grace Arata formed the “Arata 2004 Trust,” designating their son
Gary Arata (Gary)1 as trustee if the parents were unable to act as trustee, and their other
son Louis Arata (Louis) as alternate trustee if Gary was unable to act.
Gary served as trustee of the Arata 2004 Trust beginning December 5, 2005.
On December 6, 2006, Gary misappropriated2 trust funds to purchase real property in the
name of himself and his wife, Marie Arata. In 2007, Gary’s misappropriation was later
discovered. To make things right, Gary and Marie signed a promissory note for
$400,109.19 payable to the Arata 2004 Trust. The note bore interest at five percent per
year on the unpaid principal amount, with interest payable annually commencing
December 6, 2007, with the full amount of principal due and payable on December 6,
2011. The debt was secured by a mortgage on the real property purchased with the
trust’s funds.
Gary transferred his interest in the real property by quitclaim deed to Gary Jay
Arata, as trustee of the GJA Trust. On March 15, 2016, Gary died. Two days later, the
1 Because seven of the people referred to in the facts have the last name of Arata,
after we refer to them by their full names, we shorten later references to their first names.
2 Because Louis replaced Gary after Gary “borrowed” from the trust a second
time, one reasonable inference is that Gary lacked permission to use the money to buy the
property.
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No. 40247-9-III
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quitclaim deed was recorded. Lawrence Arata, Gary’s son, succeeded Gary as trustee of
the GJA Trust.
On February 25, 2017, Marie, as personal representative of her late husband’s
estate, signed and submitted an estate tax return. In the return, Marie listed the principal
balance ($400,109.19) and accrued interest ($123,866.52) owing on the promissory note
as a debt owed to the Arata 2004 Trust.
At the time when Marie signed the tax return, Marie’s daughter, Laura Arata, was
a co-trustee with Louis of the Arata 2004 Trust. Laura became the sole trustee of the
Arata 2004 Trust on March 1, 2018.
In December 2020, Stephen Bishop (Bishop) represented Marie in her capacity as
personal representative of her late husband’s estate. Peter Kim (Kim) represented
Louis, a beneficiary of the Arata 2004 Trust. Gary Dambacher (Dambacher) represented
Laura in both her individual capacity and as the trustee of the Arata 2004 Trust. On
December 15, 2020, Bishop sent an e-mail to Dambacher and Kim that reads in relevant
part:
I am the attorney for the personal representative of the estate of Gary J.
Arata. Marie Arata is the personal representative of the estate. A number
of years ago, Marie and Gary Arata purchased approximately 311 acres of
farmland located here in Whitman County. The property is presently
owned one-half by Marie Arata and one-half by the estate of Gary J. Arata.
The Aratas financed the purchase of the property with a loan from the John
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and Grace Arata Trust. This loan is evidenced by a promissory note,
secured by a mortgage covering the farmland.
As per Gary Dambacher’s request, this is to confirm that, after many
discussions with Marie Arata regarding how the obligation owed to the
John and Grace Arata Trust can be satisfied, we are going forward to list
the property for sale, with the proceeds from the sale to be applied first to
payment of the note.
Clerk’s Papers (CP) at 95.
On April 7, 2021, David Duncan replaced Laura Arata as trustee of the Arata 2004
Trust. Duncan then obtained the Arata 2004 Trust file from Dambacher and, in the file,
was the February 25, 2017 tax return.
Procedure below
On February 13, 2023, Duncan commenced this mortgage foreclosure action. The
parties conducted limited discovery and then filed cross motions for summary judgment.
Marie and the GJA Trust argued that the promissory note was payable in full on
December 6, 2011, no payment had been made since 2008, and so the six-year statute of
limitations precluded enforcement of the debt. Duncan argued that the February 25, 2017
tax return was an acknowledgement of the debt communicated by the debtor to the
creditor that restarted the statute of limitations, and/or the December 15, 2020 e-mail
from Bishop to Dambacher and Kim was an acknowledgment of the debt communicated
by the debtor to the creditor so as to revive the right to recover the debt.
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The trial court ruled in favor of Marie and the GJA Trust, determining there was
no evidence that the debtor communicated the debt to the creditor. The trial court
dismissed Duncan’s foreclosure action and quieted title to the property free from the
mortgage. Duncan appeals to this court.
ANALYSIS
Standard of Review
We review summary judgment orders de novo and engage in the same analysis as
the trial court. Keck v. Collins, 184 Wn.2d 358, 370, 357 P.3d 1080 (2015). We consider
the evidence and all reasonable inferences in the light most favorable to the nonmoving
party. Rinehold v. Renne, 198 Wn.2d 81, 96, 492 P.3d 154 (2021). Summary judgment
is appropriate only if the sworn pleadings submitted with the motion show there is no
genuine issue of any material fact. CR 56(c). A genuine issue of a material fact exists
when reasonable minds could differ on the facts that control the outcome of the case.
Dowler v. Clover Park Sch. Dist. No. 400, 172 Wn.2d 471, 484, 258 P.3d 676 (2011).
Acknowledgment of Debt
The statute of limitations to enforce a promissory note is six years.
RCW 4.16.040. This and other time bars represent a legislative declaration of public
policy that the courts must respect, with rare equitable exceptions. Bilanko v. Barclay
Ct. Owners Ass’n, 185 Wn.2d 443, 451-52, 375 P.3d 591 (2016).
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The policy behind statutes of limitations is to protect defendants from the “burdens
of litigating stale claims by requiring prospective plaintiffs to assert their claims before
relevant evidence is lost.” Fowler v. Guerin, 200 Wn.2d 110, 118-19, 515 P.3d 502
(2022). It is not surprising then, that when a debtor acknowledges the debt in writing to a
creditor, the period of time to recover is restarted.
This principle is legislatively recognized in the following statute:
New promise must be in writing. No acknowledgment or promise shall
be sufficient evidence of a new or continuing contract whereby to take the
case out of the operation of this chapter, unless it is contained in some
writing signed by the party to be charged thereby; except, an
acknowledgment or promise made after the limitation period has expired
shall not restart, revive, or extend the limitation period.
RCW 4.16.280 (LAWS OF 2019, ch. 377, § 2, effective July 28, 2019).
To constitute an “acknowledgement,” the writing must be communicated to the
creditor or his agent. Rea v. Rea, 19 Wn. App. 496, 499, 576 P.2d 84 (1978). The
communication need not include an express promise to pay. Griffin v. Lear, 123 Wash.
191, 199, 212 P. 271 (1923). Instead, “[i]f one in writing acknowledges he owes a debt,
the law will presume that he intends to pay it, unless there is something in the writing
which shows a contrary intention.” Id. “‘It is not necessary that both an admission of
the debt and a new promise to pay shall be made and signed by the party; but either is
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sufficient.’” Id. (quoting H.G. WOOD, A TREATISE ON THE LIMITATION OF ACTIONS AT
LAW AND IN EQUITY § 81b, at 436 (4th ed. 1916)).
The court in Rea further described what constitutes an effective communication:
“The modern and prevailing view is that an acknowledgment, to be
effectual so far as the removal of the bar is concerned, must be made either
to the creditor or to some one [sic] authorized to act for him, or, if to a
stranger, must have been made with the intention that it be communicated
to the creditor. Thus, although there are some earlier cases to the contrary,
as a general rule the acknowledgment of a debt made to a stranger, and not
intended to be communicated to the creditor, will not remove the bar of the
statute.”
Rea, 19 Wn. App. at 499 n.5 (quoting 51 AM. JUR. 2D Limitations of Actions § 354, at
847 (1970)).
With these principles in mind, we analyze whether the record viewed in the light
most favorable to Duncan, including all reasonable inferences, supports his argument that
the February 25, 2017 tax return listing of the debt is an acknowledgment sufficient to
restart the six-year limitations period.
The February 25, 2017 tax return signed by Marie, as personal representative of
her late husband’s estate, is a writing signed by the debtor3 that the debt is unpaid. There
is nothing in the writing that shows an intent not to pay. The only question then is
3 The mortgage secured payment of the promissory note. The debtors on the note
were Gary and Marie. Even if one debtor acknowledged the debt, the full debt would be
owed, and thus the property would be encumbered by the full debt.
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No. 40247-9-III
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whether the writing was communicated from the debtor to the creditor. For the reasons
that follow, the fact that the February 25, 2017 tax return was in the Arata 2004 Trust file
allows a trier of fact to reasonably infer that the return was communicated from the
debtor to the creditor.
Someone must have provided the tax return to attorney Dambacher for it to be in
the Arata 2004 Trust (creditor) file. Had Dambacher received it from a nonclient, one
would think that a cover letter enclosing, or an e-mail attaching, the tax return would
have been found in the file. The fact that no such document was found could lead a
reasonable trier of fact to find that the tax return was given to Dambacher by his client,
Laura, who for all material times had been either the co-trustee or the sole trustee of the
Arata 2004 Trust. Thus, the tax return could have been given to the creditor (Laura as
co-trustee or sole trustee), but by whom?
Three entities had control over the original tax return or signed copies—Marie, her
late husband’s estate attorney, and the tax return’s recipient (the State of Washington).
Laura denies she was ever a co-personal representative of her father’s estate. So, there is
little reason to believe she received the tax return from the estate’s lawyer, and no reason
to believe she received it from the State of Washington. A reasonable trier of fact,
therefore, could find that Marie, either in her personal capacity (co-debtor) or as personal
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representative of her late husband’s estate (the other co-debtor), gave the letter to Laura
(co-trustee or sole trustee of the creditor), who then gave it to Dambacher.
Marie and the GJA Trust argue that Laura filed a declaration denying that she had
ever seen the February 2017 tax return or that she provided a copy of it to Dambacher.
They argue that this denial requires one to find that the tax return was not given to Laura,
a representative of the creditor, and therefore the statute of limitations was not renewed.
We disagree. Laura may be biased. If the large debt was renewed in February 2017, her
mother Marie and the beneficiaries of the GJA Trust will have a significant encumbrance
on the subject property. A jury might reasonably disbelieve Laura’s self-serving denial.
When, on summary judgment, a “fact” is particularly within the knowledge of the
moving party and where this “fact” might reasonably be disbelieved by a jury, the matter
should proceed to a trial to permit the nonmoving party to impeach the witness directly
through cross-examination or indirectly through inferences drawn from other evidence.
Acosta v. City of Mabton, 2 Wn. App. 2d 131, 138, 408 P.3d 1095 (2018). Here, as
explained above, there are reasonable inferences that Marie gave Laura the February 25,
2017 tax return.
We conclude that a genuine issue of material fact exists as to whether the statute
of limitations was restarted on or after February 25, 2017, by the tax return being given
by the debtor to the creditor. And, because Duncan commenced this foreclosure action
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No. 40247-9-III
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within six years of that date, the trial court erred in dismissing it and quieting title in
Marie and the GJA Trust free of the mortgage. 4
Reversed and remanded.
Lawrence-Berrey, C.J.
WE CONCUR:
Staab, J. 	Cooney, J.
4 We need not analyze the effect of the December 15, 2020 e-mail from Bishop to
Dambacher and Kim. 	This is because the 2019 amendment to RCW 4.16.280 changed
the law so that an acknowledgment after the statute of limitations has run no longer can
revive a barred debt.
Relatedly, the six-year statute of limitations originally would have run on
December 6, 2017, so Duncan must establish that the February 2017 tax return was given
by Marie to Laura before that time.
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