### FILED November 7, 2013 In the Office oftheClerkofCourt W A StateCourtofAppeals, Division III IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISIONTHREE PHILLIP

### KAIREZ and CAROLYN ) KAIREZ, husband and wife, ) No. 30891-0-111 ) Appellants, ) ) 

### v. ) ) BUDGET FUNDING I, LLC, a California ) corporation, ) ) Respondent, ) UNPUBLISHED OPINION ) BENTONFRANKLIN TITLE ) CONWANY; WELLS FARGO ) FOOTHILL INC., a California ) corporation; and CITY OF PASCO, a ) municipal corporation formed under the ) laws ofthe State ofWashington, ) ) Defendants. ) SIDDOWAY, A.CJ. Phillip and CarolynKairezbrought the action below to assert a lien against an apartmentcomplex and to recover amounts they loaned to their son, whose limited liability companywas a one-time owner ofthe complex. Oneofthe several defendants-alender, BudgetFunding I, LLC-was granted summaryjudgment dismissing the Kairezes' claims against it. The Kairezes appeal. We affirm the dismissal.No.30891-0-III Kairez 

### v. BudgetFunding I, LLC
FACTS AND PROCEDURAL BACKGROUND In March 2006, Nick Kairez,l the son ofPhillip and Carolyn Kairez, formed NRK Investments LLC. Nick was the sole member and manager. A month later, NRK entered into a real estate contract to purchase an apartment complex in Pasco from James and Krista Gottula. Nick executed the contract as NRK's managerbutwas not individually a party to the contract. The contract was recorded. Nick'sparents had loaned him $50,000 to make the down payment for the property. To memorialize the loan, Nick, individually, signed and delivered a $50,000 promissory note to his parents. A month after NRK entered into the real estate contract, Nick executedwhatwas styled as a deed oftrust onthe apartment complex property to
secure the promissory note to his parents. The deed oftrust identified the grantor as Nick, however, and only he signed it, individually, as grantor. Ittoo was recorded. A $90,000 "amended"promissory note in favor ofNick'sparents was later executed by Nick and was recorded in April 2007. NRK was not mentioned in the original note, the amended note, or in the deed oftrust. The Kairezes continued to loan Nick money for costs associated withthe apartment complex through December 2008. Accordingto them, the total amount they

1Mr. and Ms. Kairez referto their son as "Nick" in their briefing and we adopt thatreference as well to avoid confusion between ourreferences to him and to his father. We intend no disrespect. 

### 2No. 30891-0-111 Kairez v. BudgetFunding I, LLC
loaned to Nickthat he used to purchase, renovate, and operate the apartment complex
was $149,104.30. In 2007, NRK sought financing from Budget Funding I, LLC and offered its interest in the apartment complex as security. Budget agreed to loan NRK $263,250 with
a portion ofthe funds to be applied first to payoffthe Gottulas. The loan documents all identified the borrower as NRK and were prepared for execution by Nick as NRK's manager. When the loan closed in September 2007, the Gottulas were paid the balance ofthe contractprice from the loan proceeds, and the earlier-executed fulfillment deed from the Gottulas to NRK was recorded, as was Budget's deed oftrust from NRK. Budget was aware ofthe Kairezes' deed oftrust and, it contends, it intended the proceeds ofits loan to NRK to be applied to satisfy amounts secured by that deed oftrust before the balance was disbursed to Nick. Budget's escrow agent contacted Carolyn Kairez before the loan closing and requested a payoffamount. According to a subescrow agent responsible for disbursing the loan proceeds, Ms. Kairez supplied a payoff figure of$70,402 and wire instructions. When the loan closed, a slightly higher amount, $70,672, was wired to a Kairez bank account. Despite making the payment, neither the
escrow agent nor Budget obtained the Kairezes' signatures on a request for reconveyance, an acknowledgmentthatthe obligation secured by the deed oftrust had been satisfied, orany other documentation that the Kairezes were relinquishing whatever interestthey held in the property. 3No.30891-0-III Kairez 

### v. BudgetFunding 1, LLC
In April 2009, the Kairezes learned from Nickthat Budget was goingto begin foreclosure proceedings. The Kairezes contacted a lawyer, who requested a copy ofa trustee's sale guarantee issued by Benton Franklin Title Company, also a defendant in the action below. The trustee's sale guarantee disclosedthe Kairezes' deed oftrust as one of the "[d]efects, liens, encumbrances or other matters affectingtitle," although it also revealed that title to the apartment complex was held by NRK and yetthe grantor ofthe Kairezes' deed oftrust was Nicholas Robert Kairez. Clerk's Papers (CP) at 61. The Kairezes' deed oftrust was identified by the guarantee as the third numbered lien, encumbrance, or matter affecting title while Budget's deed oftrust was identified as the fourth. The Kairezes construed the guarantee as establishingthat their deed oftrust was superiorto Budget's. They did not thereafter receive a notice ofthe trustee's sale, but according to Ms. Kairez this did not concern them because they understood that only lienholdersjuniorto Budget would receive notice. The trustee's sale took place in December2009. Budget was the successful bidder and the property was conveyed to it by a trustee's deed. In January 2011, more than a year afterthe foreclosure sale and more than three years after the Kairezes received $70,672 from the closing ofthe loan from Budget, they filed the action below. Budget denied liability and latermoved for summaryjudgment, which the trial court granted. This appeal followed.

4No. 30891-0-111 Kairez v. BudgetFunding 1, LLC
ANALYSIS The Kairezes argue that summaryjudgment in favor ofBudgetwas improper because genuine issues ofmaterial fact remained with respect to their claimto a continuing property interest; for negligence; and underthe Consumer Protection Act (CPA), chapter 19.86 RCW. They also argue thattheir receipt of$70,672 from the loan closing should not estop them from relying on their deed oftrust, as argued by Budget. The Kairezes failed to present evidence demonstrating any genuine issue of material fact in support oftheir claimto a property interest in the apartment complex, which is fatal to all ofthe issues they raise on appeal. We tum to that first. 

### 1. Didthe Kairezespresentevidence raising a genuine issue of material fact that they hadaproperty interest in the apartment complex? On appeal from an order granting summaryjudgment, the standard ofreview is de
novo. Hisle v. ToddPac. Shipyards Corp., 151 Wn.2d 853, 860, 93 P.3d 108 (2004). Summaryjudgmentwill be upheld ifthe pleadings, affidavits, answers to interrogatories, admissions, and depositions establish that there is no genuine issue ofmaterial fact and that the moving party is entitled tojudgment as a matter oflaw. Jones v. AllstateIns. Co., 146 Wn.2d 291,300-01,45 P.3d 1068 (2002); CR 56(c). Like the trial court, we review all facts and reasonable inferences from the facts in a light most favorable to the nonmoving party. 

### ld. at 300.



### 5No. 30891-0-111 Kairez v. BudgetFunding 1, LLC
The moving party bears the initial burden ofshowing the absence ofan issue of material fact. Young v. Key Pharm., Inc., 112 Wn.2d 216,225, 770 P.2d 182 (1989). If the moving party meets that burden, the nonmoving party must present evidence that material facts are in dispute. Atherton Condo. Apartment-OwnersAss'n Bd. of Directors
v. Blume Dev. Co., 115 Wn.2d 506,516, 799 P.2d 250 (1990). !fitfails to present evidence that material factual issues remain, then summaryjudgment is proper. Id. Budget met its initial burden by showing that the deed oftrust on whichthe Kairezes rely was granted to them by Nick, who neverhad an ownership interest in the apartment complex. The deed oftrustprovided in relevantpart: Grantors: Nicholas Robert Kairez Beneficiary: Philip[2] and Carolyn Kairez THIS DEED OF TRUST, made this
__day of , between Nicholas Robert Kairez, GRANTOR(S),
... BentonFranklinTitle Company ofKennewick, TRUSTEE,
... and Philip and Carolyn Kairez, BENEFICIARY
.... WITNESSETH: Grantor(s) hereby bargain(s), sell(s), and convey(s) to Trustee in trust, with power ofsale, the following described real property. CP at 46. The signature block for the grantor was for "NICHOLAS ROBERT KAIREZ." CP at 49. The acknowledgementrequired by RCW 64.04.020 was documented by a certification that the notary public knew or had satisfactory evidence "thatNicholas Robert Kairez is the personwho appeared before me, and said person acknowledgedthat
2The record includes various spellings ofMr. Kairez's first name. 6No.30891-0-III Kairez v. BudgetFunding 1, LLC
he signed this instrument and acknowledged it to be his free and voluntary act for the
uses and purposes mentioned in this instrument." CP at 50. One cannot convey a greatertitle or interest in property than he or she has. Sofie
v. Kane, 32 Wn. App. 889,895,650 P.2d 1124 (1982). Since Nick had no interest in the apartment complex, his written and recorded deed oftrust in favor ofhis parents conveyed no interest to BentonFranklin Title Company as trustee that could be exercised for the benefit ofthe Kairezes. In response to this initial showing by Budget, the Kairezes submitted the declarations ofMs. Kairez and Nick. Ms. Kairez's declaration stated, in part, that "[i]n
our dealings with [Nick], my husband, Nick and I all understood we were lending money to NRK." CP at 35. As to the funds wiredto her and her husband's account at the time the Budget loan closed, she stated she "believedwe were receiving a partial payment towards Nick's debt owed to us, and that was it." CP at 36. Ms. Kairez's declaration also described and attached a trustee's sale guarantee that she characterized as "includ[ing] ourDeed ofTrust as superior in time to that ofBudget's." CP at 37. Nick's declaration similarly stated, "While it appears from the
...Promissory Note, Deed ofTrust, and Amendment to PromissoryNote, thatthey were signed in my personal capacity, the intent was clearly that the debt was owedby NRK. My parents and I understood the same, and to the extent that we went forward with that intent, I ratified,
as the sole member ofNRK, the loans as NRK debts." CP at 79. Nick's declaration also 

### 7No. 30891-0-111 

### Kairez 

### v. BudgetFunding 

### LLLC
stated that "NRK, as an entity, expired as ofMarch 31, 2008. NRK was deemed inactive by the Washington State Secretary ofState as ofJuly 1,2008." 

### Id. Based on this evidence, the Kairezes argue that while the parties agree that Nick signed apromissory note and a deed oftrust, they disagree as to the capacity in which he signed the agreements and who is bound bytheir terms. According to the Kairezes, trial is required because they contend that Nick's signature boundNRKwhereas Budget contends it bound Nick individually and notNRK. Butthis disagreement over who is boundpresents a legal dispute, not a factual one. Viewing the evidence in the light most favorable to the Kairezes and accepting their testimony that there was an unwritten understanding that NRK would grant the Kairezes a deed oftrust interest in the apartment complex, the rights and obligations arising out ofthat unwritten understanding are dictated by the statute offrauds and the recording statute. The statute offrauds relating to real estate provides, in part, that "[e]very deed shall be in writing, signed by the party bound thereby." RCW 64.04.020. A deed oftrust is subject to the statute offrauds. 

### GLEPCO, LLCv. 

### Reinstra, 175 Wn. App. 545, 554, 307 P.3d 744,

### petition/or reviewfiled, No. 89245-8 (Wash. Sept. 3, 2013). In light ofthe statute, a deed oftrust interest cannot be created by an oral understanding. In addition, an unrecorded interest in real property is ordinarily subordinate to a recorded interest. 

### Zervas Grp. Architects, PSv. 

### Bay View TowerLLC, 161 Wn. App. 

### 8No. 30891-0-111 Kairez v. BudgetFunding/, LLC 322,325,254 PJd 895 (2011). This is the result under the real estate recording statute, RCW 65.08.070, which provides, in pertinentpart: A conveyance ofreal property ... may be recorded in the office ofthe recording officer ofthe county where the property is situated. Every such conveyance not so recorded is void as against any subsequentpurchaser or mortgagee in good faith and for avaluable consideration from the same vendor
... ofthe same real property or any portion thereofwhose conveyance is first duly recorded. A "conveyance" for purposes ofthe statute includes "every written instrument by which any estate or interest in real property is created, transferred, mortgaged or assigned orby which thetitle to any real property may be affected." RCW 65.08.060(3). A deed of trust is therefore a conveyance subjectto the recording statute. The unwritten, unrecorded understanding thatNRKwould grantthe Kairezes a deed oftrust interest in the apartment complex is void against Budget under the recording statute. The Kairezes nonetheless argue thatthey have shown that Nick, as the sole member ofNRK, had actual and apparent authority to bind NRK. We accept the fact that he did. Buthe did not bind NRK in the deed oftrustthat he signed individually and recorded in 2007. The language ofthat deed oftrust consistently and unambiguously identifies Nick as the grantor. It makes no mention ofNRK. Parol evidence that flatly contradicts the deed oftrust's plain meaning cannot be given substantive effect.3

3 Both parties argue that Griffin v. Union Savings and Trust Co., 86 Wash. 605, 150 P. 1128 (1915) supports their position as to the significance ofthe form ofthe signature block on the deed oftrust. A signature block assumed importance in Griffin 9No. 30891-0-111 Kairez 

### v. BudgetFunding 1, LLC
Thornton v.Interstate Sec. Co., 35 Wn. App. 19,29-30 n.2, 666 P.2d 370 (1983) (citing Mapes v. Santa Cruz FruitPacking Corp., 26 Wn.2d 145, 173 P.2d 182 (1946)). The Kairezes characterize Budget as arguing that Nick's encumbrance ofthe property was ultra vires, andthen argue that a corporation thatretains the benefit ofan ultra vires act thereby ratifies it. This argument is flawed on several levels, the most basic being that the written, recorded deed oftrust to the Kairezes is not an encumbrance by NRK at all. "The phrase 'ultravires' describes corporatetransactions that are outside the purposes for which a corporation was formed and, thus, beyond the power granted the corporation by the Legislature." Hartstene Pointe Maint. Ass'n v. Diehl, 95 Wn. App. 339, 344, 979 P.2d 854 (1999). Budget'sposition has nothing to do with the concept ofultra vires action; it merely contends, correctly, that Nick's individual written grant ofa deed of trust could not convey an interest in property in which he had no individual interest. The Kairezes finally argue that the trial court erred in finding that Nick never had any interest in the apartment complex. They argue that title to property ownedby an LLC passes to its owner andNRK ceasedto existby July 2008 at the latest, with the result that its interest in the complexpassedto Nick. See RCW 64.04.070 (providing that

because it could not be determined from the body ofthe letterthat was at issue whether the author was undertaking a guarantee individually or onbehalfofan alleged principal, disclosedby the letterhead. There is no ambiguity in the written deed oftrust in this case. Griffin and other cases that focus onthe signature block to resolve an ambiguity as to capacity are inapposite. 10No. 30891-0-111 Kairez v. BudgetFunding 1, LLC
after acquired title follows a deed). Even so, the Kairezes' deed oftrust would only attach to title in the condition that Nick received it in July 2008, subject to other encumbrances existing at that time. 18 WILLIAM B. STOEBUCK & JOHN W. WEAVER, WASHINGTON PRACTICE: REALESTATE: TRANSACTIONS 

### § 18.3, at 308 (2d ed. 2004) (citing OccidentalLife Ins. Co. v. May, 194 Wash. 201, 77 P.2d 773 (1938)). The interest acquired by Nick was subject to the deed oftrustto Budget that NRK had granted almost
a year earlier, in September 2007. To summarize, viewing the evidence in the light most favorable to the Kairezes, they were the beneficiaries under a written, recorded deed oftrust that was incapable of conveying an interest in the apartment complexbecause the grantor-their son-hadno interestto convey. They had an unwritten understandingwith their son, as manager of NRK, that they enjoyed a deed oftrust interest in the apartment complex. Butthat unwritten understanding was void underthe statute offrauds and void against Budget underthe recording statute. The trial court properly granted summaryjudgment dismissing the Kairezes' quiet title claim asserting an interest in the property. Because the Kairezes had no interest as a matter oflaw, we need not address whetherthey were estopped to assert it as a result oftheir receipt of$70,672 from the closing ofBudget's loan, as argued by Budget.

11No.30891-0-III Kairez 

### v. BudgetFunding1, LLC
II. Didthe trial court err in granting summary judgment dismissing the Kairezes ' negligence and CPA claims? The Kairezes' complaint also asserted claims against Budget for violation ofthe CPA and for negligence. In opposing summaryjudgment, they argued that the "mysterious disappearance" oftheir deed oftrust as an exception to title between the time ofthe trustee's sale guarantee and a litigation guarantee thattheir lawyer ordered in December 2010 raises a factual dispute preventing summaryjudgmenton these claims. Br. ofAppellant at 26. According to the Kairezes, "Thatthe Kairez lien interest was removed from title during the same time that Budget was conducting its foreclosure
... at
a minimum raises a factual dispute as to whetherthere has been an unfair ordeceptive act
orpractice." 

### Id. at 23. They similarly argue that removal oftheir lien interestraises a factual dispute as to a breach ofa duty ofcare. Our conclusion that the Kairezes had no lien againstthe apartment complex effectively disposes oftheir CPA and negligence claims. Because the Kairezes hadno interest in the property, Budget owedthem no duty, nor could any act or omissionby Budget cause injury to them. Beyond that, however, and even ifthe Kairezes had a viable but disputed basis for
an interest inNRK'sproperty, their sheer conjecture thattheir lien was dropped as an exception to title because ofsome wrongful act orbreach ofduty by Budget does not satisfy their burden as the nonmoving party. A nonmoving party must set forth specific
12No. 30891-0-111 Kairez 

### v. Budget Funding

### L LLC
facts showing there is a genuine issue for trial. CR 56(e). There are any number of
reasons why the title officerwhopreparedthe litigation guarantee mighthave omitted the Kairezes' deed oftrust, ranging from oversight to a conclusion that the deed oftrust did not affectNRK's title. A nonmovingparty cannotrely on mere allegations, speculation,
or argumentative assertions thatunresolved factual issues remain. Seven Gables Corp. 

### v. MGMlUA Entm't Co., 106 Wn.2d 1, 13,721 P.2d 1 (1986). Affirmed. A majority ofthe panel has determined that this opinion will not be printed in the Washington Appellate Reports but it will be filed for public record pursuantto RCW 2.06.040.

# Sidd~( 

# C{C(j:'

WE CONCUR:
Brown, J.
Kulik, 

### J.

13