Filed Washington State Court of Appeals Division Two

June 13, 2017

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION II VINCENT L. BADKIN, a divorced man, No. 49007-2-II

Appellant/Cross Respondent, v. SAMANTHA J. BADKIN, a divorced woman, UNPUBLISHED OPINION

and HOWARD M. ALLEN and NANCY B. ALLEN, husband and wife, individually and the martial community composed thereof, Respondents/Cross Appellants.

MELNICK, J. — Vincent Badkin appeals the trial court’s dismissal of his claim for a

resulting trust, and order granting ex-wife Samantha Badkin’s CR 12(b)(6) motion to dismiss and denying his motion for reconsideration.^[1] Samantha cross-appeals the trial court’s denial of her CR

11 motion for attorney fees.

We conclude that the trial court did not err by dismissing Vincent’s claim because even

assuming that the family home was held in a resulting trust, the resulting trust was repudiated and the statute of limitations ran on his claim. Because the record is insufficient, we decline to review whether the trial court abused its discretion when it did not impose attorney fee sanctions on either party. We affirm.

49007-2-II parties. CP at 29. Vincent further alleged that he and Samantha, the trust “beneficiaries,” were now tenants-in-common of the family home, and that he was entitled to 50 percent of its equity.

CP at 29. Vincent also alleged unjust enrichment and bad faith, and stated that Samantha and her

parents acted “in concert, fraudulently, under false pretenses, and with intent to mislead and misrepresent” by concealing the parties’ marital interest in the home. CP at 30.

I. MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

Samantha did not file an answer to Vincent’s lawsuit. Instead, she filed a motion to dismiss the complaint for failure to state a claim, arguing that the statute of limitations had run on Vincent’s claims. She also requested attorney fees and costs for having to defend a meritless suit.

Samantha provided the trial court with “Additional Facts in [the] Court Record” concerning

the parties’ dissolution proceedings, including the cause number and the fact that, in June 2012, the trial court denied a motion to vacate the dissolution order. CP at 9. An amended dissolution decree was entered in August 3, 2012. Subsequent litigation, including a trial and an appeal,3 resulted, but they had no effect on the findings of fact and decree regarding the division of property.

Samantha argued that the latest possible date at which Vincent’s cause of action could have

accrued was on August 3, 2012, when the court entered the final dissolution decree and the distribution of assets occurred.

Vincent responded and moved for CR 11 sanctions based on Samantha’s “frivolous” motion. CP at 13. He argued, among other matters, that Samantha failed to cite case law relating to the statute of limitations for resulting trusts and repudiation of trusts, and that she failed to meet 49007-2-II her burden. He argued that his amended complaint correctly alleged the creation of a resulting trust, and that no evidence existed to support an unequivocal repudiation of that trust.

Samantha replied, countering Vincent’s assertions regarding the statute of limitations and repudiation of the alleged trust. Samantha argued that Vincent alleged no facts under which she and the Allens treated the family home as being held for his benefit after he moved out. Even if there was a basis for imposing a resulting trust, Samantha and the Allens’ actions plainly indicated that they had no intention of giving Vincent access or rights to the family home. Vincent knew about the divorce proceedings and knew that the family home had not been listed as a community asset.

After a hearing, the trial court entered findings of fact, conclusions of law, and an order dismissing Vincent’s complaint with prejudice. ^[4] It found that a three-year statute of limitations

applied, that Vincent did not assert the discovery rule and even if he had, it did not apply. The trial court further ruled that Vincent did not plead in the amended complaint any act or failure to act that occurred within three years of filing the complaint. The trial court dismissed the case.

II. MOTION FOR RECONSIDERATION

Approximately one week later, Vincent filed a motion for reconsideration. In the alternative, Vincent moved the court to amend the order and designate the documents that the court considered in its ruling. Samantha responded to the motion and additionally moved for attorney fees pursuant to CR 11.

Vincent replied and moved to amend his complaint for a second time. He wanted to clarify that the Allens’ down payment was a gift to Vincent and Samantha for their first home in Oregon, 49007-2-II

not the family home at issue in this case. He argued that regardless of the down payment, he and Samantha obligated themselves to pay the rest of the purchase price of the home, and did so by making the mortgage, tax, and insurance payments, which created a resulting trust.

Vincent also argued that the only relevant testimony during the default divorce trial was given by Samantha as follows:

[Trial court]: [Vincent’s attorney] has claimed that you own the family home that you currently reside in; is that a true and accurate statement? [Samantha]: No, it is not.

CP at 55.

On March 28, 2016, the trial court entered an order denying Vincent’s motion for reconsideration. The order stated that the court treated Samantha’s CR 12(b)(6) motion to dismiss as a CR 56 motion for summary judgment. It also stated that the court considered the court documents from the parties’ dissolution proceedings.^[5]

The order stated that treating the family home, alleged to be held in a resulting trust, as

though it was the sole property of the Allens “repudiate[d] any trust in” the home. CP at 67. The trial court found, “Once a beneficiary of a trust has notice of the repudiation of that trust by the trustee, the statute of limitations begins to run against the beneficiary.” CP at 67. Based on the findings of fact and conclusions of law from the May 2012 dissolution, the court found that the Allens treated the family home as their own. It further found that the family home had not been listed as a marital asset in the May 2012 dissolution proceedings; therefore, Vincent had notice that the Allens treated the family home as their own and that it was not community property.

49007-2-II

The trial court concluded that because Vincent filed this lawsuit more than three years after he received notice, the statute of limitations had run. The court did not impose attorney fees pursuant to CR 11 on either party and did not provide its reasoning in the order for declining to do so.

Vincent appeals and Samantha cross-appeals.

ANALYSIS

I. MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

Vincent argues that the trial court erred by granting Samantha’s motion to dismiss because he pled sufficient facts to show that a resulting trust had been created in the family home. ^[6] He argues that Samantha did not meet her burden of showing that he could not prove facts consistent with his complaint that would entitle him to relief. We conclude that the trial court correctly

dismissed the case because, even if we assume that a resulting trust arose in the family home, the resulting trust was repudiated and the statute of limitations ran on Vincent’s claim.

A. STANDARD OF REVIEW

We review a trial court’s dismissal of a claim under CR 12(b)(6) de novo. Trujillo v. Nw.

Tr. Servs., Inc., 183 Wn.2d 820, 830, 355 P.3d 1100 (2015). Dismissal is proper unless it appears beyond doubt that the plaintiff can prove no set of facts, consistent with the complaint, that would justify recovery. Sea-Pac Co., Inc. v. United Food & Commercial Workers Local Union 44, 103

Wn.2d 800, 802, 699 P.2d 217 (1985). We presume all facts alleged in the plaintiff’s complaint as true and may consider hypothetical facts supporting the plaintiff’s claims. Kinney v. Cook, 159 49007-2-II

Wn.2d 837, 842, 154 P.3d 206 (2007). All reasonable inferences from the alleged facts are drawn in the plaintiff’s favor. Trujillo, 183 Wn.2d at 830.

A CR 12(b)(6) motion to dismiss for failure to state a claim is treated as a motion for summary judgment when matters outside the pleadings are presented to and not excluded by the court. Sea-Pac, 103 Wn.2d at 802. Summary judgement is proper if there is no genuine issue of any material fact, and the moving party is entitled to judgment as a matter of law. Bavand v. OneWest Bank, F.S.B., 176 Wn. App. 475, 485, 309 P.3d 636 (2013). We review a trial court’s order granting summary judgment de novo. Bavand, 176 Wn. App. at 485.

B. RESULTING TRUST & REPUDIATION

“A trust is the holding of property subject to a duty of employing it or applying its proceeds

according to directions given by the person from whom it was derived.” State ex rel. Wirt v. Superior Court for Spokane County, 10 Wn.2d 362, 369, 116 P.2d 752 (1941). “A trust in real estate implies a holding of the legal title by one for the benefit of another, who holds the equitable title–a separation of the legal estate from the beneficial enjoyment.” State ex rel. Wirt, 10 Wn.2d at 369.

There are three types of trusts: express, resulting, and constructive. Carkonen v. Alberts, 196 Wn. 575, 578, 83 P.2d 899 (1938). Implied or “resulting” trusts are created by operation of law, “where the acts of the parties have no intentional reference to the existence of any trust.”

Carkonen, 196 Wn. at 578. Because a resulting trust is raised by implication of law, it is equitable in nature. Stocker v. Stocker, 74 Wn. App. ^[1], 6, 871 P.2d 1095 (1994).

A resulting trust arises when a person conveys a property’s legal title to another under circumstances that reasonably shows that the person did not intend for the grantee to have a beneficial interest in the property. Thor v. McDearmid, 63 Wn. App. 193, 205, 817 P.2d 1380 49007-2-II

(1991). Thus, where property is purchased by one person, but placed in the name of another, the person with legal title is presumed to hold it subject to the equitable ownership of the purchaser, absent evidence of contrary intent. In re Estate of Spadoni, 71 Wn.2d 820, 822, 430 P.2d 965

(1967).

The crucial element in a resulting trust is the intent of the grantor to transfer the property

without the beneficial interest. Thor, 63 Wn. App. at 205. In the absence of other evidence of intent, a resulting trust is presumed in favor of a person who pays the consideration for real property deeded to another. Engel v. Breske, 37 Wn. App. 526, 529, 681 P.2d 263, review denied, 102 Wn.2d 1025 (1984).

An action based on a resulting trust is subject to a three-year statute of limitations.

Arneman v. Arneman, 43 Wn.2d 787, 797, 264 P.2d 256 (1953); RCW 4.16.080(3), (4). The statute of limitations begins to run on a resulting trust not when the trust is formed, but “when the trustee

repudiates the trust and notice of such repudiation is brought home to the beneficiary.” Dep’t of Revenue v. Puget Sound Power & Light Co., 103 Wn.2d 501, 509, 694 P.2d 7 (1985). “A repudiation occurs when the trustee by words or other conduct denies there is a trust and claims the trust property as his or her own.” Goodman v. Goodman, 128 Wn.2d 366, 373, 907 P.2d 290

(1995). “The repudiation must be plain, strong, and unequivocal.” Goodman, 128 Wn.2d at 373.

We assume, without deciding, that a resulting trust arose regarding the family home. ^[7]

However, we conclude that any resulting trust was repudiated and that Vincent had notice of the repudiation in May 2012 when the trial court entered the dissolution decree.

49007-2-II

A petition for dissolution of marriage must specify community property which must be

disposed of in the proceeding. RCW 26.09.020(1)(f). The trial court must then dispose of the property and the liabilities of the parties. RCW 26.09.080.

As Vincent alleged in his amended complaint, and as the court found, Samantha neither

listed the family home as community property nor acknowledged it as a marital asset during the dissolution proceedings. On May 7, 2012, the trial court entered a dissolution decree which it amended on August 3, 2012. Samantha’s testimony that she did not claim any ownership interest in the family home, and the failure to list the family home as community property in the dissolution proceeding was conduct evidencing a denial or repudiation of the existence of a resulting trust.

It is also irrelevant that the alleged “trustees,” the Allens, were not parties to the dissolution proceedings. Vincent had clear and unequivocal notice that the home was not being held in trust for him. The evidence, therefore, showed that the “trustees” treated the property as their own when

the parties separated, the family home was not partitioned, and the home continued to be held in the Allens’ names. The repudiation was plain, strong and unequivocal.

We conclude that Vincent had notice of repudiation when neither party listed the family home in the dissolution proceeding. Because the trust was repudiated more than three years before

Vincent filed his complaint, we conclude that the statute of limitations barred his claim, and the trial court did not err in dismissing his complaint

II. MOTION FOR RECONSIDERATION

Vincent next argues that the trial court erred by denying his motion for reconsideration because the court considered dissolution documents not in the record, and because there was no evidence of repudiation of the trust. Based on our discussion above and the record as a whole, we conclude that the trial court did not abuse its discretion by denying Vincent’s motion for 49007-2-II reconsideration. Jacob’s Meadow Owners Ass’n v. Plateau 44 II, LLC, 139 Wn. App. 743, 752 n.1, 162 P.3d 1153 (2007).

III. CR 11 SANCTIONS – ATTORNEY FEES

Lastly, Vincent argues that the trial court erred by failing to impose sanctions for attorney fees because Samantha’s arguments and CR 11 motion for attorney fees were frivolous. Because the record is insufficient, we do not review the issue.

We review CR 11 sanctions for an abuse of discretion. Biggs v. Vail, 124 Wn.2d 193, 197, 876 P.2d 448 (1994). The party seeking review has the burden to perfect the record so that we

have before us all of the relevant evidence. Bulzomi v. Dep’t of Labor & Indus., 72 Wn. App. 522, 525, 864 P.2d 996 (1994). “An insufficient record on appeal precludes review of the alleged errors.” Bulzomi, 72 Wn. App. at 525; RAP 9.2(b).

Vincent chose to not provide a verbatim report of proceedings for our review. The record before us shows that the trial court declined to impose sanctions and award attorney fees to either party. However, nothing in the record shows the trial court’s reasoning for declining to do so.

Without such a record, we can only guess at why the trial court declined to impose sanctions and award attorney fees. Because the omission of the hearing transcript affects our ability to review the issue, it is fatal.

IV. CROSS-APPEAL

In Samantha’s cross-appeal, she argues that the trial court erred by failing to impose attorney fees pursuant to CR 11 because Vincent brought a groundless action. Because the record is insufficient, we do not review the issue.

As we discuss above, the party seeking review has the burden to perfect the record so that we have before us all of the relevant evidence. Bulzomi, 72 Wn. App. at 525. Samantha did not 49007-2-II provide a sufficient record for us to review her cross-appeal. No verbatim report of proceedings was filed and nothing in the record shows the trial court’s reasoning for declining to impose sanctions. Because the record is insufficient, we can only guess at why the trial court declined to impose sanctions and award attorney fees. Therefore, we decline to review the issue.^[8]

We affirm.

A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record in accordance with RCW

2.06.040, it is so ordered.

Melnick, J. We concur: Bjorgen, C.J. Lee, J.