Court Opinion

ID: 4711371
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:36:51.084827+00
Date Added: 2024-06-11T08:07:08.451689
License: Public Domain

Sanders, J.
(dissenting) — Transfer means transfer. RCW 19.40.091 plainly provides any action to set aside a fraudulent transfer is extinguished one year after the transfer was, or could have been, discovered.
Prior to Washington’s adoption of the Uniform Fraudulent Transfer Act (UFTA) in 1988, the general three-year statute of limitations for fraud governed fraudulent conveyance actions. Aberdeen Fed. Sav. & Loan Ass’n v. Hanson, 58 Wn. App. 773, 776, 794 P.2d 1322 (1990). Under the general statute a cause of action for fraud did not accrue until the claimant discovered facts constituting the fraud. RCW 4.16.080(4); Aberdeen, 58 Wn. App. at 778. However the rule was changed by the Legislature upon adoption of UFTA.
RCW 19.40.091 is a new extinguishment statute without antecedent in the previous Uniform Fraudulent Conveyance Act (UFCA). See Frank R. Kennedy, Reception of the *825Uniform, Fraudulent Transfer Act, 43 S.C. L. Rev. 655, 684 (1992).
Extinguishment of cause of action. A cause of action with respect to a fraudulent transfer or obligation under this chapter is extinguished unless action is brought:
(a) Under RCW 19.40.041(a)(1), within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant; . . .
RCW 19.40.091(a) (emphasis added).
RCW 19.40.091(a) simply provides a cause of action is extinguished within one year "after the transfer . . . was or could reasonably have been discovered . . . .” (emphasis added). The court is not permitted to read into a statute "those things which . . . the legislature may have left out unintentionally,” Jepson v. Department of Labor & Indus., 89 Wn.2d 394, 403, 573 P.2d 10 (1977), nor can it "add words to a statute even if . . . the legislature intended something else but failed to express it adequately.” Vita Food Prods., Inc. v. State, 91 Wn.2d 132, 134, 587 P.2d 535 (1978). As Justice Holmes explained, "We do not inquire what the legislature meant; we ask only what the statute means.” Oliver Wendell Holmes, Collected Legal Papers 207 (1920) (quoted in Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 397, 71 S. Ct. 745, 95 L. Ed. 1035, 19 A.L.R.2d 1119 (1951) (Jackson, J., concurring). Even if we were to inquire into legislative intent, we must "assume the legislature meant what it said,” Jepson, 89 Wn.2d at 403, and we may not " 'add to, or subtract from, the language of the statute unless imperatively required to make it a rational statute.’ ” State v. Taylor, 97 Wn.2d 724, 728, 649 P.2d 633 (1982) (quoting McKay v. Department of Labor & Indus., 180 Wash. 191, 194, 39 P.2d 997 (1934)).
RCW 19.40.091 displaces the common-law discovery of fraud rule by requiring the one-year limitation to run from the discovery of the transfer, not the fraud. The stat*826ute mandates the cause of action is extinguished "within four years” after the transfer was made or "if later, within one year after the transfer” was or could reasonably have been discovered. The Legislature used the word "transfer” in both the four-year and one-year provisions. No reason is advanced to give the same word, within the same sentence, two completely different meanings. As McMaster v. Farmer, 76 Wn. App. 464, 468, 886 P.2d 240 (1994), stated: "[W]e cannot conclude that the drafters of the 1-year clause carelessly used the plain word 'transfer’ when they actually meant 'fraudulent nature of the transfer’ or 'proof of the elements of the cause of action.’ ” Id. However, the majority rewrites through judicial fiat the plain meaning of RCW 19.40.091(a), apparently believing the date the fraud is discovered makes better sense, or is more just, as a starting point.
Perhaps the Legislature indeed made the wrong choice; however, RCW 19.40.091(a) clearly reflects a rational and intentional choice, if not the best one. "The underlying purpose inherent in the function of judicial interpretation of statutory enactments is to effectuate the objective or intent of the legislature.” Amburn v. Daly, 81 Wn.2d 241, 245, 501 P.2d 178 (1972). The stated legislative purpose of section 9 of UFTA, and consequently RCW 19.40.091(a), is to create an orderly, predictable, and uniform time for a claimant to bring a fraudulent transfer suit. The section as written, "transfer” and all, accomplishes just that. See Frank R. Kennedy, The Uniform Fraudulent Transfer Act, 18 UCC L.J. 195, 210 (1986); Uniform Fraudulent Transfer Act § 9 cmt., 7A U.L.A. 665-66 (1985) (UFTA § 9). As the Court of Appeals recognized, the statute exhibits a clear preference for finality and uniformity over flexibility. See McMaster, 76 Wn. App. at 470. The finality with which the trial court disposed of Petitioners’ claims is exactly what the drafters of section 9 intended: it ended Petitioners’ opportunity to file a lawsuit at a specific time one year after discovery of the transfer. This is a tough bright-line rule.
In a different sense the one-year discovery rule itself is *827designed to mitigate the harsh result of the four-year discovery rule that is embodied in the first part of RCW 19.40.091(a). "UFTA . . . provides an additional, though shorter, time period to guard against the potentially harsh application of the four-year extinguishment provision .... The plain language of the statute makes the one-year 'safety valve’ limitations period available to all claimants under the UFTA.” First Southwestern Fin. Servs. v. Pulliam, 121 N.M. 436, 912 P.2d 828, 830 (1996).
The majority opinion does some new mischief of its own. Its unique version of the rule undermines UFTA’s goal of predictable, final, and uniform time limits within which a claimant’s suit may be filed. However RCW 19.40.091’s very purpose is to "mitigate the uncertainty and diversity that have characterized the decisions [in different jurisdictions] applying statutes of limitations to actions to fraudulent transfers and obligations.” UFTA § 9 Comment (2) at 666. The statute was designed to create uniformity across states lines. See Kennedy, The Uniform Fraudulent Transfer Act, 18 UCC L.J. at 210; Michael L. Cook & Richard E. Mendales, The Uniform Fraudulent Transfer Act: An Introductory Critique, 62 Am. Bankr. L.J. 87, 95 (1988). But the majority destroys uniformity by making UFTA mean one thing in Washington and something else, everywhere else. Compare RCW 19.40.903 ("This chapter shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it.”).
Notwithstanding, the majority claims the statute’s goal of uniformity is served because "[i]n enacting the UFTA, the number of years under Washington’s statute of limitations became consistent with that of other states.” Majority at 823. Not so. While the claim extinguishes after one year, that year begins to run later than nearly all other states. As McMaster acknowledged, of all the states which have adopted UFTA, Arizona alone rejected the extinguishment provision of section 9. 76 Wn. App. at 468. However, it did so the old-fashioned way—by legislative amendment.
*828In Arizona a claimant must bring an action "within one year after the fraudulent nature of the transfer or obligation was or through the exercise of reasonable diligence could have been discovered by the claimant.” Ariz. Rev. Stat. Ann. § 44-1009(1) (West 1994) (emphasis added). Arizona legislatively changed the text of the uniform statute to incorporate the fraudulent nature interpretation imposed by our majority yet rejected by the drafters of the Uniform Act. In so doing Arizona expressly recognized that UFTA’s provision starts the statutory clock upon discovery of the transfer itself rather than upon discovery of the transfer’s fraudulent nature. Our Legislature could have followed Arizona’s lead, but elected uniformity and certainty instead. We are not the Legislature. I dissent.
Durham, C.J., and Dolliver and Alexander, JJ., concur with Sanders, J.