Court Opinion

ID: 9960320
Source: CourtListenerOpinion
Date Created: 2024-04-15 21:17:52.923209+00
Date Added: 2024-06-11T08:19:22.957140
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

 STEVEN BAGOT,
                                                   No. 84440-7-I (consolidated with
                      Respondent,                  No. 84905-1-I)

               v.                                  DIVISION ONE

 SMRB, LLC, a Washington Limited                   UNPUBLISHED OPINION
 Liability Company d.b.a. GREEN
 ACRE PHARMS; and ROBERT
 RUSSELL,

                       Petitioners,

 RENEWABLE TECHNOLOGIES
 SOLUTION, INC., a Nevada
 Corporation; GREEN ACRES
 PHARMS, LLC, a Washington Limited
 Liability Company; and GUY
 GRIFFITHE,

                      Defendants.

       CHUNG, J. — Steven Bagot sued Roger Russell and others in Skagit

County, alleging breach of contract, fraud, misrepresentation, civil conspiracy,

and other claims related to several payments he made to invest in a cannabis

operation. The parties settled and stipulated to dismissal with prejudice. Bagot

then filed another lawsuit, this time in King County, against the same parties

alleging the same causes of action and an additional claim under the Washington

Securities Act. Except for the Securities Act violation, the trial court granted

summary judgment dismissing all claims on the grounds of claim preclusion.
No. 84440-7-I/2 (consol. with No. 84905-1-I)

        Bagot and Russell each filed motions for discretionary review of the

court’s summary judgment rulings based on the claim preclusion doctrine. A

commissioner of this court granted review only as to Russell’s motion, which

sought review of the trial court’s denial of summary judgment dismissal of the

Securities Act claim. We conclude the trial court erred by denying summary

judgment on the Securities Act claim and reverse.

                                             FACTS

        Robert Russell and his wife formed SMRB, LLC in 2013 and were its sole

members. In 2015, SMRB 1 received a Washington state license to produce and

process cannabis at a facility in Anacortes, Washington. After SMRB began

operating, Russell determined the company needed a larger space and began

exploring sources of funding. Guy Griffithe and his company Renewable

Technologies Solutions, Inc. (RTSI) expressed interest in investing. 2 Russell and

Griffithe entered an agreement in which RTSI paid $1.5 million to purchase 49

percent of the net profits distributed to Russell by SMRB. The agreement

expressly provided that RTSI did not acquire an ownership interest and would not

be a shareholder in SMRB. The agreement acknowledged that RTSI intended to

        1 SMRB also has a registered d.b.a. of “Green Acre Pharms.”
        2 According to Griffithe, in late 2016 or early 2017, he converted the membership

interests in RTSI’s profit rights into membership interests in a Nevada LLC called Green Acres
Pharms, with the sole function of serving “as a vehicle for the sale of profit rights and the
distribution of profits to the holders of those rights.” The record is inconsistent as to whether
Griffithe’s entity is Green Acres Pharms or Green Acre Pharms. Griffithe’s Green Acres Pharms
LLC is a separate entity from SMRB’s Green Acre Pharms. Russell was never a member of
Griffithe’s LLC and has never acted on its behalf.

                                                     2
No. 84440-7-I/3 (consol. with No. 84905-1-I)

sell portions of this “dividend interest” in order to fund the purchase. Russell and

SMRB would have no role in these sales.

        In March 2017, Steven Bagot, a California resident, entered into a

“subscription agreement” with RTSI to purchase four percent of the company for

$450,000. Under the subscription agreement, Bagot would receive four percent

of the net dividend interest paid to RTSI by SMRB. On October 10, 2017, Bagot

signed a promissory note agreeing to provide Green Acres Pharms, 3 Griffithe,

and Russell with $100,000, and they agreed to repay the principal within 90

days. 4 The note further provides that interest is payable “on the unpaid principal

at the rate of 10% for 90 calendar days, calculated monthly not in advance,” and

“for every month thereafter there will be a $4,500.00 a month penalty or $150.00

per day.” The promissory note included personal guarantees by Griffithe and

Russell. However, only Bagot and Griffithe, for himself and on behalf of Green

Acres Pharms, signed the note.

        Bagot followed this promissory note with a letter of understanding (LOU)

signed by Griffithe on November 26, 2017. The LOU confirmed that Bagot

intended to purchase an additional two percent interest in RTSI for $200,000,

increasing his total ownership to six percent “representing 6% of the net income

or sale of the business of Green Acres Pharm and SMRB, to be paid quarterly.”

The LOU further provided that a portion of the investment 5 was to be used only

        3 The promissory note does not specify whether the Green Acres Pharms named is the

d.b.a. of SMRB or Griffithe’s LLC. While SMRB’s entity is named Green Acre Pharms, the record
confusingly refers to it as Green Acres Pharms.
         4 In one place, the note misstates the principal amount as “$100,000,00.00 USD.”
         5 Paragraph 2 of the LOU states that “the $200,000 being invested will be used only for the

completion of the cryogenic oil processing machine purchase,” while paragraph 3 states “[t]he
overall intent is for $100,000 of the $200,000 investment be used toward the cryogenic oil machine

                                                     3
No. 84440-7-I/4 (consol. with No. 84905-1-I)

for the completion of a cryogenic oil processing machine purchase, and if

sufficient funds were not raised to complete the purchase within two weeks “that

deal will be considered ‘dead’ and all monies returned.” Additionally, after

purchase of the equipment, Bagot was to be repaid under the terms of the

promissory note: “The overall intent is for $100,000 of the $200,000 investment

be used toward the cryogenic oil machine purchase, and the other $100,000 be

used to repay the October 10, 2017 promissory note.” Within days of the LOU,

Bagot and Griffithe entered into a second subscription agreement for purchase of

the additional six percent for $200,000.

        Bagot did not receive repayment for the money loaned under the terms of

the promissory note when it became due on January 8. RTSI also failed to make

regular disbursements or provide accounting related to Bagot’s six percent

interest. Bagot retained counsel, who sent a notice of default with a demand for

payment on the promissory note in January 2018. In April 2018, after having

received no response to his demand, Bagot filed suit against SMRB d.b.a. Green

Acres Pharms, Russell, Griffithe, RTSI, and Green Acres Pharms in Skagit

County Superior Court. Bagot raised ten claims: breach of contract, unjust

enrichment, fraud, negligent misrepresentation, conversion, promissory estoppel,

civil conspiracy, breach of fiduciary duty, breach of good faith and fair dealing,

and violation of Washington’s Limited Liability Company (LLC) Act records

disclosure requirements.

purchase . . . .” Reading the LOU as a whole, paragraph 2 appears to contain a scrivener’s error
and should state that $100,000 is for the machine purchase.

                                                   4
No. 84440-7-I/5 (consol. with No. 84905-1-I)

       The parties entered into a settlement agreement on July 23, 2018.

Russell, Griffithe, and the defendant companies agreed to pay $139,887.50 to

Bagot. In turn, Bagot agreed to dismiss the claims with prejudice. Specifically, the

settlement agreement provided that Bagot

       releases, acquits and discharges Defendants from all claims and
       causes of action, whether based on contract, tort, statutory or other
       legal or equitable theory of recovery, arising out of Defendant’s
       obligation to pay Plaintiff pursuant to the terms of the Note signed
       on or about October 10, 2017. This release shall not release any
       obligation or right created by this Agreement.

Additionally, the settlement agreement specified, “This release shall not release

nor affect any other obligation or right existing between Plaintiff and Defendants,

including but not limited to the Letter of Understanding signed by and between

Plaintiffs and Defendants on or about November 24, 2017.”

       On August 24, 2018, Bagot’s counsel sent a letter to the attorney

representing SMRB, RTSI, and both Green Acres Pharms entities “in an effort to

find an equitable solution to these ongoing issues between our clients and to

avoid litigation.” The letter detailed the companies’ failure to use the investment

for the cryogenic oil processing equipment as promised, violations of the

Washington Securities Act, as well as the lack of quarterly disbursements since

December 2017 and accounting of the business since September 2017. Bagot’s

counsel expressed that he was willing to forego a lawsuit if they agreed to repay

the $650,000 investment, including an immediate repayment of the $200,000 that

was not properly used under the terms of the LOU. Counsel concluded with a

warning that failure to provide a response within 72 hours would result in service

of a summons and complaint no later than September 21, 2018.

                                             5
No. 84440-7-I/6 (consol. with No. 84905-1-I)

       On September 7, 2018, in accordance with the settlement agreement, 6 the

parties entered a stipulation for dismissal with the Skagit County Superior Court.

The agreed stipulation stated that the action “is voluntarily dismissed with

prejudice and without costs, this matter having been fully settled and

compromised between Plaintiff and Defendant[s], pursuant to CR 41(a)(1)(A).”

On September 10, 2018, the court entered an order dismissing all claims with

prejudice based on the stipulation between the parties.

       In January 2019, Bagot filed a second lawsuit against SMRB, Green Acres

Pharms, RTSI, Russell, and Griffithe, this time in King County Superior Court.

Bagot again raised claims of breach of contract, unjust enrichment, fraud,

negligent misrepresentation, conversion, promissory estoppel, civil conspiracy,

breach of fiduciary duty, breach of good faith and fair dealing, and violation of

Washington’s LLC Act records disclosure requirements, with an additional claim

for violation of the Washington Securities Act.

       The action was stayed from January 2020 to March 2021 due to RTSI’s

bankruptcy filing. After the stay was lifted, the parties engaged in extensive

motions practice. Bagot, Griffithe, and Russell/SMRB all filed motions for

summary judgment. The court held two days of oral arguments in June 2021. On

September 10, the court denied Bagot’s and Griffithe’s motions and continued

the hearing on Russell/SMRB’s summary judgment motion until October.

       6 Bagot agreed to dismiss the claims with prejudice within five days of receiving the first

monthly payment, which, according to a schedule attached to the settlement agreement, was due
on August 3, 2018.

                                                    6
No. 84440-7-I/7 (consol. with No. 84905-1-I)

      In September 2021, Russell/SMRB and Griffithe each filed second

motions for summary judgment that, for the first time, argued that the claims in

Bagot’s King County lawsuit were precluded by res judicata due to the settlement

of the Skagit County case. Bagot responded to the motions for summary

judgment, claiming that defendants failed to demonstrate that the King County

and Skagit County lawsuits shared the same causes of action and subject matter

as required for claim preclusion. In October 2021, the trial court heard argument

on Russell/SMRB’s original summary judgment motion and the defendants’

motions based on claim preclusion.

      On November 19, 2021, the trial court issued two separate orders on the

summary judgment motions. One order was based on Russell/SMRB’s original

motion for summary judgment filed on May 7, 2021, and granted summary

judgment dismissal of Bagot’s claims of breach of contract, breach of good faith

and fair dealing, promissory estoppel, breach of fiduciary duty, conversion, and

violation of the Washington LLC Act. That order denied Russell/SMRB’s request

for summary judgment on the claims of fraud, negligent misrepresentation, civil

conspiracy, unjust enrichment, and violation of Washington Securities Act. The

second order granted partial summary judgment and dismissal of all of Bagot’s

claims against Russell/SMRB and Griffithe based on the application of res

judicata except unjust enrichment, and denied summary judgment on Bagot’s

claim for violation of the Washington Securities Act.

      Bagot and Russell/SMRB both filed motions for reconsideration.

Russell/SMRB requested reconsideration of the denial of summary judgment on

                                            7
No. 84440-7-I/8 (consol. with No. 84905-1-I)

the Securities Act claim. Russell/SMRB also sought clarification as to the court’s

ruling on the unjust enrichment claim, which had been omitted from the order on

summary judgment based on res judicata. Bagot sought reconsideration of the

dismissal of the remaining claims and also claimed that the defendants had

waived res judicata by failing to plead the affirmative defense in their answer and

pursuing the case for more than two years before seeking dismissal on this

basis.

         In an order issued February 1, 2022, the trial court denied Russell/SMRB’s

motion for reconsideration on the Securities Act claim, but clarified that the unjust

enrichment claim was dismissed under res judicata. In another order issued the

same day, the trial court requested that Russell/SMRB provide responsive

briefing on the issue of waiver of the res judicata defense.

         During a status conference in April 2022, Russell/SMRB requested leave

to file a renewed motion for summary judgment based on new evidence. Griffithe

had discovered that Bagot’s counsel had included him on an April 2018 e-mail to

another person involved with the investment scheme. Sent the day Bagot filed

the lawsuit in Skagit County Superior Court, the e-mail stated “I am going after

you and the 502 company that lured [Bagot] to invest. You and your colleagues

have committed securities fraud.” The trial court granted Russell/SMRB’s request

to file this renewed motion for summary judgment and dismissal of the Securities

Act claim on the grounds of res judicata. The court also allowed Bagot to file a

motion for summary judgment on the Securities Act claim. Griffithe joined

                                             8
No. 84440-7-I/9 (consol. with No. 84905-1-I)

Russell/SMRB’s motion and their response to Bagot’s motion. The court

subsequently denied the cross-motions for summary judgment.

        Russell/SMRB filed a motion for discretionary review of the denial of the

renewed motion for summary judgment on the Securities Act claim. Bagot

requested discretionary review of the court’s order granting summary judgment

dismissal of all claims except for the Securities Act claim. 7 The two motions for

discretionary review were consolidated. A commissioner of this court granted

discretionary review of the trial court’s denial of the summary judgment on the

Securities Act claim but denied Bagot’s request for review of the summary

judgment dismissal of his other claims. 8 Griffithe is not a party to this appeal.

                                         DISCUSSION

        The trial court granted summary judgment dismissing Bagot’s claims

against Russell/SMRB except for the claim based on the Securities Act. 9 We

review orders on summary judgment de novo. Kim v. Lakeside Adult Fam. Home,

185 Wn.2d 532, 547, 374 P.3d 121 (2016). We construe evidence and

reasonable inferences in the light most favorable to the nonmoving party. Id.

        7 Bagot also moved for discretionary review of the trial court’s denial of his motion

seeking summary judgment in his favor on the Securities Act claim. A commissioner of this court
denied discretionary review.
         8 While the commissioner determined that Bagot’s request for review of dismissal of his

other claims under the res judicata doctrine did not meet any of the criteria for discretionary
review, for the purposes of judicial economy, allowed Bagot to provide briefing on the applicability
of res judicata to his other claims for consideration as appropriate.
         9 Bagot repeatedly refers to Russell’s renewed motion for summary judgment as

defendants’ second motion for reconsideration of the partial summary judgment on res judicata.
Bagot cites the abuse of discretion standard of review that applies to review of a trial court’s
motion for reconsideration rather than the de novo standard that applies to review of summary
judgment decisions. According to the record, Russell requested leave to file a new motion for
summary judgment, which the court granted. The motion was brought outside the 10-day filing
period for a motion for reconsideration. CR 59. Regardless of the procedural posture, appellate
courts review application of the claim preclusion doctrine de novo. Weaver v. City of Everett, 194
Wn.2d 464, 473, 450 P.3d 177 (2019).

                                                     9
No. 84440-7-I/10 (consol. with No. 84905-1-I)

Summary judgment is appropriate when there is no genuine issue of material fact

and the moving party is entitled to judgment as a matter of law. Folsom v. Burger

King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998) (citing CR 56(c)).

        The summary judgment decisions at issue were based on res judicata.

The term “res judicata” is often referred to as claim preclusion and refers to

restrictions on relitigating the same claim or cause of action. 10 14A DOUGLAS J.

ENDE, W ASHINGTON PRACTICE: CIVIL PROCEDURE § 35:20, at 552 (3d ed. 2018).

Claim preclusion is an equitable remedy that precludes relitigation of already

determined causes in the interest of judicial finality and economy. Weaver v. City

of Everett, 194 Wn.2d 464, 472-73, 450 P.3d 177 (2019).

        Claim preclusion prevents relitigation of an entire claim when a prior

proceeding involving the same parties and issues culminated in a judgment on

the merits. Id. at 480. The party asserting claim preclusion has the burden of

proof to establish that the prior action and the challenged action have

“concurrence of identity” in four areas: (1) subject-matter; (2) cause of action;

(3) persons and parties; and (4) the quality of the persons for or against whom

the claim is made. Id. All four elements must be satisfied to establish claim

preclusion. Hisle v. Todd Pac. Shipyards Corp., 151 Wn.2d 853, 866, 93 P.3d

108 (2004). The parties in this case do not dispute that the prior lawsuit ended in

        10 As the U.S. Supreme Court has noted, the terms “claim preclusion” and “issue

preclusion” “have replaced a more confusing lexicon. Claim preclusion describes the rules
formerly known as ‘merger’ and ‘bar,’ while issue preclusion encompasses the doctrines once
known as ‘collateral estoppel’ and ‘direct estoppel.’ ” Taylor v. Sturgell, 553 U.S. 880, 892 n.5,
128 S. Ct. 2161, 171 L. Ed. 2d 155 (2008) (citing Migra v. Warren City Sch. Dist. Bd. of Ed., 465
U.S. 75, 77 n.1, 104 S. Ct. 892, 79 L. Ed. 2d 56 (1984)).

                                                    10
No. 84440-7-I/11 (consol. with No. 84905-1-I)

a final judgment and they have a concurrence of identity as to parties and the

quality of the persons. 11

        In addition to precluding claims that were brought, the doctrine of claim

preclusion applies to entire claims that could have been brought in a prior action.

Weaver, 194 Wn.2d 481. When the parties to two successive proceedings are

the same and the first proceeding resulted in a final judgment, “a matter may not

be relitigated, or even litigated for the first time, if it could have been raised, and

in the exercise of reasonable diligence should have been raised, in the prior

proceeding.” Kelly-Hansen v. Kelly-Hansen, 87 Wn. App. 320, 328-29, 941 P.2d

1108 (1997).

        Determining whether a matter should have been litigated requires

consideration of several factors, including “whether the present and prior

proceedings arise out of the same facts, whether they involve substantially the

same evidence, and whether rights or interests established in the first proceeding

would be destroyed or impaired by completing the second proceeding.” Id. at

330. Courts have determined that a matter should have been raised for the

purposes of claim preclusion if it is “merely an alternate theory of recovery, or an

alternate remedy.” Id. at 331. Claim preclusion does not apply if a necessary fact

was not in existence at the time of the first proceeding, or if there were valid

reasons for not asserting the claim earlier. Kelly-Hansen, 87 Wn. App. at 331.

         11 A stipulated dismissal with prejudice is a final judgment on the merits for the purposes

of claim preclusion. Berschauer Phillips Const. Co. v. Mutual of Enumclaw Ins. Co., 175 Wn. App.
222, 228 n.11, 308 P.3d 681 (2013).

                                                    11
No. 84440-7-I/12 (consol. with No. 84905-1-I)

Whether claim preclusion applies is a question of law reviewed de novo. Weaver,

194 Wn.2d at 473.

        I.      Waiver of Affirmative Defense

        Bagot claims Russell/SMRB waived the affirmative defense of claim

preclusion through the civil rules and common law waiver. Generally, affirmative

defenses such as claim preclusion are waived unless they are pleaded, asserted

in a CR 12(b) motion, or tried by the express or implied consent of the parties.

CR 8(c); Bickford v. City of Seattle, 104 Wn. App. 809, 813, 17 P.3d 1240 (2001).

Additionally, “under the common law doctrine of waiver, waiver of affirmative

defenses can occur under certain circumstances in two ways: if the defendant’s

assertion of the defense is inconsistent with the defendant’s previous behavior

and if defendant’s counsel has been dilatory in asserting the defense.” Oltman v.

Holland Am. Line USA, Inc., 163 Wn.2d 236, 246, 178 P.3d 981 (2008).

However, “the rule’s policy is to avoid surprise and affirmative pleading is not

always required.” Bickford, 104 Wn. App. at 813.

        Russell/SMRB does not dispute that they neither pleaded claim preclusion

in their answer nor filed a motion under CR 12(b). Despite these omissions,

Bagot responded to the motion for summary judgment and contested application

of the doctrine during oral arguments before the trial court. 12 Bagot thoroughly

participated in contesting the merits of the claim preclusion argument in response

        12 For the first time on appeal, Bagot argues the April 2018 e-mail from Bagot’s counsel

was inadmissible as summary judgment evidence. Bagot did not raise the issues of admissibility
or authenticity below. Without an objection and trial court ruling to review, we cannot address the
issue of admissibility Bagot now raises. “It is our duty to review evidentiary rulings made by the
trial court; we do not ourselves make evidentiary rulings.” Jacob’s Meadow Owners Ass’n v.
Plateau 44 II, LLC, 139 Wn. App. 743, 756, 162 P.3d 1153 (2007). Furthermore, the trial court
considered the e-mail exhibit on summary judgment. Bagot waived his evidentiary challenge.

                                                    12
No. 84440-7-I/13 (consol. with No. 84905-1-I)

to Russell/SMRB’s summary judgment motion. “When issues that are not raised

by the pleadings are tried by express or implied consent of the parties, they will

be treated in all respects as if they had been raised in the pleadings.” Dewey v.

Tacoma Sch. Dist. No. 10, 95 Wn. App. 18, 26, 974 P.2d 847. Bagot’s litigation of

the issue of claim preclusion before the trial court constituted implied consent.

Thus, he waived his claim that Russell/SMRB waived the affirmative defense.

       II.    Application of Doctrine of Claim Preclusion

       Russell/SMRB claims the trial court erred by failing to dismiss the

Securities Act claim as precluded under the doctrine of claim preclusion.

Russell/SMRB argues that Bagot pleaded a common law securities claim in

Skagit County, relying on the e-mail message to show that Bagot knew of the

Securities Act when he filed the Skagit lawsuit. Bagot contends because he did

not know of the fraudulent investment scheme at the time of the Skagit lawsuit,

his claims were not ripe, and therefore he could not have brought the Securities

Act claim in April 2018. We agree with Russell/SMRB.

       Securities Act claims require a fraudulent or deceitful act committed in

connection with the offer, sale or purchase of any security. RCW 21.20.010;

Kinney v. Cook, 159 Wn.2d 837, 842, 154 P.3d 206 (2007). For the purposes of

the Act, the definition of a “security” “ ‘embodies a flexible rather than a static

principle, one that is capable of adaptation to meet the countless and variable

schemes devised by those who seek the use of the money of others on the

promise of profits.’ ” Cellular Eng’g, Ltd. v. O’Neill, 118 Wn.2d 16, 24, 820 P.2d

                                              13
No. 84440-7-I/14 (consol. with No. 84905-1-I)

941 (1991) (quoting Securities & Exch. Comm’n v. W.J. Howey Co., 328 U.S.

293, 299, 66 S. Ct. 1100, 90 L. Ed. 1244 (1946)).

       The Skagit complaint effectively pleaded the Securities Act violation

through common law claims. For instance, the claim for negligent

misrepresentation includes an allegation of defendants’ failure to disclose that

“the ownership interest held by the non-i502 Nevada limited liability company

(Green Acres Pharms, LLC) in SMRB d.b.a. Green Acres Pharms that may

substantially dilute or limit the interest Plaintiff was caused to believe he was

purchasing by and from Defendants.” Further, the Skagit complaint alleges that

“the disclosure of this information would have caused Mr. Bagot to act differently

in ways including, but not limited to, issuing the $100,000 (one hundred thousand

dollar) principal at issue in this action, signing the Agreement, and acquiring

ownership interest in Green Acres Pharms.” In support of the negligent

misrepresentation cause of action, Bagot’s complaint alleges a deceitful act—the

failure to disclose—in connection with the sale of interest which meets the

elements of a Securities Act claim.

       Similarly, the conspiracy claim in the Skagit case alleged, “A combination

of Defendants SMRB d.b.a. Green Acres Pharms, Green Acres Pharms, LLC,

Robert Russell, and Guy Griffithe worked in concert to unlawfully deprive Mr.

Bagot of his money, ownership interest and resulting rights in, and quarterly

disbursements from SMRB d.b.a. Green Acres Pharms.” This pleading describes

a deceitful act related to Bagot’s purchase of an interest in the companies. Again,

these allegations state facts that could establish a Securities Act claim. The

                                             14
No. 84440-7-I/15 (consol. with No. 84905-1-I)

promissory note did not provide an ownership interest. And the Skagit lawsuit

names multiple defendants, even though the promissory note was signed only by

Bagot and Griffithe. Therefore, the pleadings in the Skagit case pertain to more

than just the promissory note; they reach the investment scheme as a whole.

Proof of the Skagit claim requires evidence regarding the entire investment

relationship between the various parties, beyond the limited scope of default on

the promissory note.

       The King County Securities Act claim includes language similar to that

used in the Skagit complaint. The complaint alleges that the defendants offered

for sale non-registered corporate securities, including stock/membership interest

in RTSI and/or SMRB which was an unlawful offer and sale of security, and they

“made untrue statements and/or omitted material facts, and engaged in an act,

practice, course of business, or employed a device, scheme, or artifice in order to

operate a fraud or deceit upon Plaintiff.” These allegations mirror the Skagit

lawsuit claim that Defendants’ misrepresentations caused him to purchase

ownership in the companies. The claims arise out of the same facts: the alleged

misrepresentations and the $650,000 investment for ownership in the

companies. Both the Skagit misrepresentation claim and the King County

Securities Act claim would hinge on evidence related to the entire investment

transaction.

       Moreover, the April 2018 e-mail from Bagot’s lawyer, sent the day the

Skagit lawsuit was filed, confirms Bagot was aware of the facts giving rise to his

claim that that the investment scheme violated the Securities Act. “Knowledge by

                                            15
No. 84440-7-I/16 (consol. with No. 84905-1-I)

the attorney is imputed to the client.” Hill v. Dep’t of Lab. & Indus., 90 Wn.2d 276,

279, 580 P.2d 636 (1978). The e-mail stated that Bagot was “lured” to invest and

informed one of the investment group executives, “You and your colleagues have

committed securities fraud.” The e-mail indicates that Bagot knew the facts

underlying his claims of securities violations and the claim was ripe at the time of

filing of the Skagit lawsuit.

       This situation differs from cases where the facts related to the second

lawsuit had yet to occur when the first was concluded. For example, in Weaver,

the plaintiff filed for temporary disability believing that he was cured of his cancer-

related claims, but later discovered the cancer had metastasized. 194 Wn.2d at

482. The permanent disability claim did not exist and, therefore, could not be

litigated at the time of the temporary disability claim. Id. By contrast, the record

here indicates Bagot already knew that securities violations had occurred when

he filed the Skagit case.

       As for the trial court’s grant of the defendants’ motions for summary

judgment dismissing Bagot’s other claims based on claim preclusion, the

commissioner denied discretionary review, ruling that Bagot had failed to meet

any of the criteria for review under RAP 2.3(b)(1), (2), and (3). Bagot did not seek

modification of the commissioner’s ruling. Accordingly, we decline to review the

issues raised in Bagot’s motion for discretionary review.

                                   CONCLUSION

       Bagot’s Securities Act claim could have been brought at the time of the

Skagit case and is, therefore, precluded under the doctrine of claim preclusion.

                                             16
No. 84440-7-I/17 (consol. with No. 84905-1-I)

We reverse the trial court’s denial of summary judgment as to that claim and

remand for further proceedings consistent with this decision.

WE CONCUR:

                                           17