IN THE COURT OFAPPEALS OF THE STATE OF WASHINGTON

MARGARET L. CURTIS, individually and No. 78248-7-I as Personal Representative ofthe Estate (Consolidated with No. 78405-6 ofAllen L. Curtis, and No. 78340-8)

Respondent/Cross-Appellant, DIVISION ONE
V. UNPUBLISHED OPINION VLADAN R. MILOSAVLJEVIC,

Appellant/Cross-Respondent,
LARI-ANNE MILOSAVLJEVIC, HIDDEN CREEK II, LLC, ROCK & SHIELD, LLC, MEADOWDALE MARINA, LLC, and ICARUS HOLDING, LLC, Defendants. FILED: October 14, 2019 CHUN, J.

—The trial court concluded Vladan Milosavljevic owed $1,268,528.16 on a $1.4 million loan obligation to Margaret Curtis and the Estate ofAllen Curtis (collectively, Curtis). In arriving atthe figure, the court applied offsets againstthe debtfor (1) Milosavljevic’s conveyance ofa propertyto Hidden Creek II, LLC, ofwhich the Curtises were the sole members, and (2) his subsequent expenditures incurred in developing the property. On appeal, Milosavljevic argues the limitations period on the loan agreement claim expired priorto suit and, in the alternative, that he should have received credit againstthe loan obligation for his personal services rendered inNo. 78248-7-1/2

developing the property. Milosavijevic also argues the trial court erred in its computation ofthe credits. Curtis cross-appeals, arguing the trial court should not have applied offsets againstthe loan obligation because the transfer and expenditures solely benefited Hidden Creek, and no legal basis exists forveil-piercing. Curtis also asserts that, undera previously discharged bankruptcy plan, Milosavijevic already owed a deed oftrust on the transferred property; hence, Curtis argues, this constitutes another reason whythe trial court should not have applied an offsetforthe transfer. Finally, Curtis claims the trial court erred in denying interest on a $239,404.80 payment by Milosavljevic, which he owed under his bankruptcy plan. We affirm the trial court’s determination that a six-yearstatute of limitations governs the loan agreement. But because Milosavljevic’s transferof property and expenditures benefitted Hidden Creek—and no basis exists forveilpiercing—we reverse the trial court’s application of offsets to the debt. Additionally, we affirm the trial court’s conclusion that Milosavljevic does not owe interest on the $239,404.80 payment. Because ofthe discharge of Milosavljevic’s bankruptcy plan, the payment qualities as voluntary. I. BACKGROUND On February 18, 2010, Milosavljevic filed a chapter 11 bankruptcy petition in the United States Bankruptcy Court forthe Western District ofWashington. Allen and Margaret Curtis filed a claim for$3,259,615.59 in the case.1

1 A prior loan agreement, notat issue in this case, formed the basisforthis claim.
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The terms ofthe bankruptcy plan provided forthe Curtisesto receive the balance of a settlement payment due to Milosavijevic and a deed oftrust on certain property in Bothell (Kenmore parcel). In addition, the Bankruptcy Court held $248,214.76 for potential claims the IRS may have against Milosavljevic. The Bankruptcy Court expected thatthe IRS would find Milosavljevic owed no tax during the period relevantto bankruptcy, and ordered that in the event these held funds exceeded the IRS claim, the remainder be disbursed to the Curtises. On September 16, 2011, the Curtises received partial payment oftheir bankruptcy claim in the amount of$1,401,155.14; but Milosavljevic nevergranted the deed of trust on the Kenmore parcel. The Curtises made a new loan of $1 .4 million to Milosavljevic. On October3, 2011, Milosavljevic and the Curtises entered into a written loan agreement providing as follows: LOAN AGREEMENT b/n VLADAN MILOSAVLJECIV [sic] & ALLEN and MARGARET CURTIS I, VLADAN MILOSAVLJEVIC, will pay ALLEN AND MARGARET CURTIS, our loan of $1,400,000.00 (one million-four hundred-00 dollars) My personal guarantee, is [the Kenmore parcel] [Signed by Milosavljevic and the Curtises.] On February 13, 2012, the IRS amended its claim to $0.00, and the BankruptcyCourt ordered thatthe $248,214.76 held in its registry be released to Milosavljevic’s counsel. The Bankruptcy Court directed Milosavljevic’s counsel to disburse some ofthe fundsto himself and the United StatesTrustee’s office, and the balance ofthe funds—$239,404.80—to the Curtises. On April 10, 2012,

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Milosavijevic withdrewthe funds in cash but did nottransferthe proceeds to the Curtises. Milosavijevic’s counsel, however, reported to the Bankruptcy Court that payment had been made to the Curtises pursuant to the terms ofthe chapter 11 plan. On April 20, 2012, the Bankruptcy Court entered an Order Discharging Debtors and Final Decree Closing Case forthe plan (“Orderof Discharge”). On March 12, 2013, Milosavljevicformed Hidden Creek, a limited liability company, designating himself as the manager and the Curtises as the only members. On March 14, 2013, Milosavljevic conveyed the Kenmore parcel to Hidden Creek; the property’s value amounted to $550,000 at the time oftransfer. Afterthe transfer, Milosavljevicworked to improve the property and incurred $434,526.96 in out-of-pocket expenses in doing so. Milosavljevic also claimed at trial to have worked over2,000 hoursto develop the Kenmore parcel. Allen Curtis died on December31, 2015. Margaret Curtis, his wife, serves as the personal representative of his estate. According to Milosavljevic, after Allen Curtis’s death, Margaret Curtis encouraged him to continue development of the Kenmore parcel and ready it forsale. On February 8, 2017, Curtis filed a complaint against Milosavljevic seeking, among otherclaims, recovery ofthe loaned $1.4 million. Milosavijevic paid $239,404.80 to Curtis on May 1, 2017. On October27, 2017, Curtis moved forsummaryjudgment. In response, Milosavljevic argued that the three-year limitations period of RCW 4.16.080 barred the suit. On December 1, 2017, the trial court denied Curtis’s motion. On December 8, 2017, Curtis moved for reconsideration, requesting eithersummary
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judgment on the note or partial summaryjudgment on Milosavljevic’s affirmative defenses, including his statute of limitations defense. In an order reconsidering its denial of Curtis’s summaryjudgment motion, the trial court granted partial summaryjudgment and struckthe statute of limitations defense. It concluded that, whether analyzed as a negotiable instrument under RCW 62A.3-1 04 oras a written contract, the six-year limitations period applied to the loan agreement. The matter proceeded to a bench trial in 2018. In its Findings of Fact and Conclusions of Law, the trial court concluded that Milosavljevic owed payment underthe loan agreement, but applied offsets for (1) Milosavljevic’s conveyance ofthe Kenmore parcel to Hidden Creek, and (2) his out-of-pocket expenses incurred in developing the property. After its computation ofthis sum, the court concluded Milosavljevic owed $976,235.46 in principal and $292,292.71 in prejudgment interest, applying the transfer and expenditures first to accrued interest and then to principal.2 In addition, the trial court concluded the Order of Discharge discharged all of Milosavljevic’s obligations underthe Chapter 11 plan, rendering the $239,404.80 paymentvoluntarywith no interest owing. Both sides appeal.

2 In its Findings of Fact and Conclusions of Law, the trial court stated that Milosavijevic owed $974,094.07 in principal and $291,443.70 in pre-judgment interest, “As calculated in Attachment A.” These figures appearto be in error, as they differfrom the calculations in Attachment A and those in the trial court’s Judgment. The parties appearto agree that, underthe judgment, Milosavijevic owes $976,235.46 in principal and $292,292.71 in interest. 5No. 78248-7-1/6 II. ANALYSIS

A. Appeal from Order Granting Reconsideration of Denial ofSummary Judgment Milosavljevic argues thatthe trial court erroneously concluded that a sixyear limitations period governs the parties’ loan agreement. He contends that the three-yearstatute of limitations, RCW4.16.080(3), applies to the agreement, which he characterizes as a partially integrated contract.3 Curtis argues the trial court properly concluded otherwise.4 We agree with Curtis. We review de novo an ordergranting summaryjudgment and perform the
same inquiry as the trial court. Owen v. Burlington N. & Santa Fe R.R., 153 Wn.2d 780, 787, 108 P.3d 1220 (2005). “Summaryjudgment is available only if the pleadings, depositions, answers to interrogatories, admissions on file, and any affidavits showthatthere is no genuine issue as to any material fact and that the moving party is entitled tojudgment as a matter of law.” Bogle and Gates, PLLC v. Holly Mountain Res., 108 Wn. App. 557, 560, 32 P.3d 1002 (2001). We will not reverse a court’s ruling on reconsideration absent a showing of manifest abuse ofdiscretion. Hookv. Lincoln County. Noxious Weed Control Bd., 166 Wn. App. 145, 158, 269 P.3d 1056 (2012). “Atrial court abuses discretion when

~ Rcw4.16.o80: “The following actions shall be commenced within three years:

. . . (3) Exceptas provided in RCW4.16.040(2), an action upon a contractor liability, express or implied, which is not in writing, and does notarise outofanywritten instrument[.]”

~As an alternative basisforconcluding the six-year limitations period governed the loan agreement, thetrial courtdetermined the loan agreementconstituted a negotiable instrumentas defined by RCW62A.3-104. On appeal, Milosavijevicargues the court erred in reaching this finding; Curtis concedes error is likely. Because we ultimatelyconclude thetrial court properly determined the loan agreement is governed by a six-yearstatute of limitations as a contract in writing, we declineto examinewhetherthe loan agreement mayalso be a negotiable instrument. 6No. 78248-7-1/7

its decision is based on untenable grounds or reasons.” Wilcoxv. Lexington Eye Inst., l3OWn. App. 234, 241, 122 P.3d 729 (2005). “Awritten agreementfor purposes of [RCW4.16.040(1)’s six-year] limitation period must contain all essential elements ofthe contract, which include the subject matter, parties, terms and conditions, and price or consideration.” Urban Dev., Inc. v. Evergreen Bldg. Prods. LLC, 114Wn. App. 639, 650, 59 P.3d 112 (2002). Additionally, “a borrower’s promise to repay loaned funds is.

. an essential element ofa loan agreement.” Nat’l Bank of Commerce of Seattle v. Preston, 16 Wn. App. 678, 680, 558 P.2d 1372 (1977). But “if resortto parol evidence is necessaryto establish any material elementthen the contract is partly oral and the 3-yearstatute of limitations applies.” Nat’l Bank of Commerce of Seattle, 16 Wn. App. at 679. To decide whetheran agreement is written, or partly oral and partly in writing, a court must consider “all relevant, extrinsic evidence, eitheroral orwritten

. . . . That is a question offact.” Barberv. Rochester, 52 Wn.2d 691, 698, 328 P.2d 711 (1958). Ifthe loan agreement contains all essential elements, then it constitutes a written agreementsubjectto
a six-yearstatute of limitations. We review onlythe pleadings, depositions, answers to interrogatories, admissions on file, and any affidavits available to the trial court atthe time of decision to determine whetherthe loan agreementwas a contract in writing. See Bogle & Gates, PLLC, 108 Wn. App. at 560. In addition, because the orderof reconsideration effectively granted partial summaryjudgment on Milosavljevic’s

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statute of limitations defense, we draw all reasonable inferences in his favor. See Bocile & Gates, PLLC, 108 Wn. App. at 560. The loan agreement includes the essential elements ofthe subject matter, parties, consideration, and promise to repay loaned funds: Milosavljevic promised to repay $1.4 million in loaned funds backto the Curtises.5 RCW 9.52.010 supplies the interest rate forthe agreement.6 Milosavljevic contends that one must resortto extrinsic evidence to understand additional and essential terms and conditions ofthe agreement; namely, that Milosavljevic was to use some ofthe funds to develop the Kenmore parcel, thatthe parties planned to share in the profits ofthe development ofthe Kenmore parcel, and his beliefthat by conveying the Kenmore parcel to the Curtises he satisfied his debtto them. But the evidence available to the trial court at reconsideration does not showthatthese were essential elements ofthe loan agreement. ~ Atthe stage ofthe motion for reconsideration and summaryjudgment, Milosavljevic failed to raise a genuine issue offact as to whetherthe loan agreementwas a contract in writing. Thus, the trial court did not err in concluding that a six-year limitations period applied to the loan agreement.
“I, VLADAN MILOSAVLJEVIC, will payALLEN AND MARGARET CURTIS, our loan of $1,400,000 (one million-fourhundred-00 dollars).” Milosavljevic’s argues thatthe meanings of “will pay” and “our loan” are ambiguous. His argument is unpersuasive.

6 RCW 19.52.010 supplies a 12 percent interest rate “where no different rate is agreed to in writing between the parties.”

~ Milosavljevic points to testimonial evidence from the trial as a means ofestablishing that notall essential elements ofthe loan agreementwere in writing. His assignmentoferror, however, is tothe pretrial ruling. Thus, we do not considerthis evidence in reaching our conclusion. 8No. 78248-7-1/9

B. Appeal from Trial “Where the trial court has weighed the evidence, our review is limited to ascertaining whetherthe findings offact are supported by substantial evidence and, ifso, whetherthe findings supportthe conclusions of law and thejudgment.” Tacoma v. State, 117 Wn.2d 348, 361, 816 P.2d 7(1991). We reviewde novo questions and conclusions of law. Sunnyside Valley lrri.ciation Dist. v. Dickie, 149 Wn.2d 873, 880, 73 P.3d 369 (2003). 1. Loan Agreement Offsets Milosavljevic argues the trial court properly applied offsets against the loan obligation for his transferofthe Kenmore parcel to Hidden Creek and his expenditures in developing the property, butthatthe trial court improperlydenied offsets for his personal services in developing the property. Curtis argues no offsets can be properly applied because Milosavijevic’s transfer, expenditures, and services benefitted Hidden Creek, and notthe Curtises. We conclude that the trial court improperly applied offsets against the loan obligation. Here, underthe loan agreement, Milosavljevic owed an amountto the Curtises. Milosavljevic’s expenditures, personal services, and conveyance ofthe Kenmore parcel, however, benefitted Hidden Creek. The LLC form protects its members from personal liability on the LLC’s obligations. RCW25.15.126. As such, the Curtises could not be personally liable to Milosavljevic with respectto benefit he conferred upon Hidden Creek. The liabilities in question were not between the same parties, indicating they could not be properly offset against

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each other. Cf~ Johnson v. California-Washington Timber Co., 161 Wn. 96, 103, 296 P. 159 (1931) (separate liabilities between the same parties may be offset). Notwithstanding the foregoing, the trial court applied offsets againstthe loan obligation for Milosavljevic’s expenditures and conveyance ofthe Kenmore parcel to Hidden Creek. It is unclear underwhattheorythe trial court did so. Disregard ofthe LLC form appears to be the most likelyjustification.8 Ct In re Rapid Settlements, Ltd.’s Application forApproval ofTransfer of Structured Settlement Payment Rights, 166 Wn. App. 683, 691-695, 271 P.3d 925 (2012) (allowing offsetdespite no mutuality ofobligation because veil-piercing was justified). A court “may disregard the LLC entityto impose personal liability on the LLC’s members.” Landstar Inway, Inc. v. Samrow, 181 Wn. App. 109, 123, 325 P.3d 327 (2014). In doing so, the court applies the same test as is used to pierce the corporate form and apply liability on a corporation’s shareholders. Landstar Inway, 181 Wn.App. at 123; RCW25.15.061. Acourt may disregard the LLC form and impose liability on its members in circumstances where (1) the LLC form is used intentionallyto violate or evade a duty, and (2) disregard is necessary and required to prevent unjustified loss to the injured party. Meisel v. M & N Modern Hydraulic Press Co., 97 Wn.2d 403, 410, 645 P.2d 689 (1982). A

8The trial court’s oral ruling provides: With regards to the LLC, however, the court cannot ignore that the Curtises are the people who benefitfrom thattransferto the LLC. They are the only principal agents ofthe LLC, and the courtwould find thatat leastthe LLC was an agentof the Curtises’ and the receipt ofthat conveyance was in paymentforthe

—forthat loan. 3 Reportof Proceeding at367. 10No. 78248-7-I/li

court looks forevidence offraud, misrepresentation, orsome form of manipulation ofthe LLC to the member’s benefitwhen conducting this analysis. Truckweld EQuip. Co. v. Olson, 26 Wn. App. 638, 644-45, 618 P.2d 1017 (1980) (applying the same rule to corporations). The party alleging abuse ofthe LLC form bears the burden of proof. Jet Boats, Inc. v. Puqet Sound Nat’l Bank, 44 Wn. App. 32, 46, 721 P.2d 18 (1986). “The absence ofa finding offact in favor ofthe partywith the burden of proofabout a disputed issue is the equivalent ofa finding againstthat party on that issue.” CarWash Enters., Inc. v. Kampanos, 74 Wn. App. 537, 546, 874 P.2d 868 (1994). Here, none ofthe trial court’s findings offact demonstrated fraud, misrepresentation, orabuse ofthe LLC form bythe Curtises. Thus, by granting Milosavljevic offsets against the loan for his expenditures and conveyance ofthe Kenmore parcel to Hidden Creek, the trial court unjustifiably disregarded the LLC form.9 Because we determine offsets were improper,1° we decHne to decide whetherthe trial court properly computed their application to the loan agreement.

~ Because doing sowould also require piercing the form of Hidden Creek, Milosavijevic is likewise not entitled to any offsetfor his personal services in developing the Kenmore parcel.

10 In supportofhis claim that he is entitled to offsets, Milosavljevic additionally advances an unjustenrichmenttheory. But he cannot usethe theory of unjustenrichmentto circumventthe protections ofthe LLC form. ~ McKesson HBOC. Inc. v. NewYorkState Common Retirement Fund, Inc., 339 F.3d 1087, 1093-1096 (9th Cir. 2003) (disallowing unjustenrichmentclaim againsta Delaware public corporation where piercing the corporate veil was unjustified); see also QVC, Inc. v. OurHouseWorks, LLC, 649 Fed.Appx. 223, 228 (3d Cir. 2016) (“[P]ermitting a party that has contracted with a subsidiaryto recoverdamagesfrom a corporate parent on an unjust enrichmenttheorywould allow plaintiffsto evade Illinois corporate liability limitations. QVC cannot usethe equitable remedyofunjust enrichmentto circumventstate veil-piercing requirements see also N. Am. Steel Connection, Inc. v. Watson Metal Prods. Corp., 515 Fed.Appx. 176, 179-181 (3d Cir. 2013) (rejecting an unjustenrichmentclaim on the basisthat piercing the corporateveil was unjustified). 11No. 78248-7-1/12

2. Interest on the $239,404.80 Payment Curtis argues thatthe trial court erred by not imposing a 12 percent interest rate on Milosavijevic’s $239,404.80 payment. Milosavijevic argues the trial court properlyfound no interest due on the payment, because itwas rendered voluntary bythe Bankruptcy Court’s Orderof Discharge. We agree with Milosavijevic. Under 11 

## U.s.c§ 524(a), “anyjudgment of any courtthat does not honor [a] bankruptcy discharge is ‘void’ tothat extent.” In re Pavelich, 229 B.R. 777, 781 (B.A.P. 9th Cir. 1999). If a state courtjudgment purports to establish personal liability of a debtoron a discharged debt, thejudgment is void. Pavelich, 229 B.R. at 782. Afederal court need not give full faith and creditto state courtjudgments that are void under 11 U.S.C. 

### § 524(a)(1). Pavelich, 229 B.R. at 782. While state courts cannot “varythe terms ofthe discharge, they have considerable authorityto except particulardebts from discharge,” and “determine whethera particulardebt is or is not within the discharge.” Pavelich, 229 B.R. at 783. State courtjurisdiction to determine dischargeability is concurrent with federal bankruptcy courtjurisdiction. Herring v. Texaco, Inc., 161 Wn.2d 189, 195, 165 P.3d 4 (2007). We review de novo whethera debt is discharged by an orderof discharge. See DeAtleyv. Barnett, 127 Wn. App. 478, 483, 112 P.3d 540 (2005) (reviewing de novo whether a bankruptcy discharge that discharged the debtor’s obligation of performance also discharged the debtor’s corresponding right offirst refusal).
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A bankruptcy court closes a case afterthe estate is fully administered. 11 U.S.C. 

### § 350(a). A discharge for cause held after notice and hearing discharges all plan debts. 11 U.S.C. 

### § 1141(d)(5)(A). Buta discharge does not eliminate a debtor’s obligation to pay debts excepted from discharge by 11 U.S.C. 

### § 523. 11 U.S.C. 

### § I 141(d)(2); see also Pavelich, 229 B.R. at 783 (referring to child support debts subjectto II U.S.C. 523(a)(5), drunk driving injury debts subjectto II U.S.C. 523(a)(9) as examples ofdebts that a state court hasjurisdiction to decide whetherthey are exemptfrom discharge). The Order of Discharge here granted a discharge under 11 U.S.C. 

### § 1141, and declared thatthe bankruptcyestate was fully administered and thus closed. The Orderof Discharge made no reservation in its grant ofdischarge under 11 U.S.C. 

### § 1141. The Bankruptcy Court entered the Order of Discharge based
on an erroneous understanding that Milosavljevic had fully complied with his obligations to the Curtises. But even ifthe Orderwrongfully discharged the plan, Curtis’s debt is not ofa kind enumerated by 11 U.S.C. 

### § 523. Additionally, even in full view ofthe factthat not all facets ofthe plan were complied with before the original Order of Discharge, the Bankruptcy Court recently declined to vacate the Order of Discharge. Thus, the trial court, acting in concurrentjurisdiction with the federal bankruptcy courts, could not have properly excepted Curtis’s debtfrom discharge. In accord with its determination thatthe Orderof Discharge discharged all of Milosavijevic’s Chapter 11 plan obligations, the trial court properly declined to

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impose interest on the “voluntary payment” of $239,404.80. The payment was voluntary and as such, no interest is due. We affirm in part, reverse in part, and remand forfurther proceedings consistentwith this opinion.11

WE CONCUR: 

# ‘c9~ c~~4
I



# ~ ‘~

In lightofthe above conclusions, we need notaddressthe other issues raised bythe parties.
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