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    IN THE COURT OF APPEALS OF THE STATE OF WASHING

                                            DIVISION II

SCOTT A. WALKER and FRED WAGNER,


                                 Appellants,                          06   A U 1: 1Cf' tl


       V.



SCOTT SERVEN, a single man,                                       UNPUBLISHED OPINION


                                 Respondent.




       MAXA, J.      Scott Walker and Fred Wagner appeal the trial court' s summary judgment '

dismissal of their claims against Scott Serven for money due on loans, securities fraud, and

common law fraud arising from their investment in a project to renovate and operate a hotel in

Mexico. We hold that summary judgment was appropriate because Walker and Wagner failed to

show that there were genuine issues of material fact that ( 1) the parties entered into a loan


agreement or any other agreement that would require Severn to refund the money Walker and

Wagner invested, (2) Serven made a misrepresentation or engaged in fraudulent or deceitful

conduct upon which Walker and Wagner reasonably relied sufficient to trigger liability for

securities fraud, and ( 3) Serven knowingly made a false statement of material fact as required to

recover   for   common   law fraud.   Accordingly,   we affirm.
No. 44063- 6- 11




                                                         FACTS


       In 2005, Serven, Scott Griffin, Rick Seddon, and Chris Johnston decided to purchase and

renovate a dilapidated hotel in Loreto, Mexico. The four investors made the following capital

contributions to the project: Serven: 55 percent; Griffin: 25 percent; Seddon: 10 percent; and

Johnston: 10 percent. Serven and Griffin formed a Mexican corporation to own the hotel


property. The investors all agreed to contribute additional capital to the project in proportion to

their initial investments. They also agreed that once the project was completed, they would

receive shares in the Mexican corporation in proportion to their total contributions.


       Both Johnston         and   Seddon   initially   contributed $   120, 000 to the project. The document


governing Johnston' s interest provided:

        On the day of May 3, 2006 Chris and Alicia Johnston are hereby granted the right
       to   purchase   10% of the Loreto Hotel Mission stock.
        The purchase price is base[ d] on the final cost to purchase and remodel /build the
        Hotel. Receipt is hereby acknowledged for payment to date of $120, 000. 00.
        The balance is       payable as     the   expenses occur.   The purchase[ r] hereby agrees to
        pay the share of expenses equal to their respective ownership within five business
         days]   of notice.        After payment for this stock is received in fall, the purchaser
        shall be at their own expense officially added to the Mexican corporation " Loreto
        Hotel Mission[ "].
        Profit and los[ s] es shall be distributed to each member of the corporation based on
        their pro -rat[ a] interest in the corporation.


Clerk' s Papers ( CP)   at   474. Seddon signed' an identical agreement.


        Soon thereafter, Johnston and Seddon decided to withdraw from the project. In 2006,

Walker and Wagner became involved. The parties dispute whether Walker and Wagner

purchased Johnston and Seddon' s interests or whether their investments were made under a




1 There are no signed copies of either agreement in the record. But Serven stated in a declaration
that he at one time had documents bearing Johnston' s and Seddon' s signatures. And Walker and
Wagner do not dispute that these agreements were signed.
                                                             2
No. 44063 -6 -II


separate agreement. Serven testified that Wagner acquired Seddon' s interest in the corporation

and that Walker acquired Johnston' s interest. Seddon testified that Walker bought Johnston' s

interest and that Wagner purchased his interest. By contrast, Walker asserts that he made all

payments to Serven' s bank accounts. In his deposition, Serven testified that Walker had

purchased his interest from Johnston. However, he acknowledged that there was a document

stating that Walker had        paid $   120, 000 to the entity, not Johnston'2 The parties do not dispute
that Wagner      made an     initial $ 120, 000   payment directly to Seddon.

         Walker and Wagner made a series of payments to the Mexican corporation between


December 2005 and February 2010. Both Walker and Wagner stated that these payments went

to an account controlled by Serven and in his name. The parties disputed the nature of these

payments.       Serven stated that, except for a $ 180, 000 payment Wagner made in 2008 to cover


Griffin' s shortfall when he could no longer make capital contributions to the hotel, all of the

payments were capital contributions. Walker and Wagner asserted that all of the payments were


loans.


         The     parties   had ongoing discussions      about   issuing   stock to Wa      er   an   agner   or their
                                                                                                                -



contributions to the corporation. Beginning in 2007, the parties began discussing the option of

creating a United States entity to hold shares in the Mexican corporation. In a May 2007 e -mail

to Walker and Wagner, Serven stated:


             Currently the most significant action we are taking is to form a Washington
             corporation that will hold all of the shares of stock in the Loreto Mission Hotel
             corporation   in Mexico.      All of the shares in the [ M] exican corporation will be



2 Serven appears to challenge the authenticity of this. document. He stated that he " discovered
that the Walkers created this document, signed my name to it and had the hotel buy [ Johnston]' s
interest back     and   then bought their interest     from the hotel." CP     at   343.   When asked if it was
true that the Walkers bought a 10 percent interest from the entity itself, Serven responded,
 That'   s   the way   it' s documented." CP at 343 -44.
                                                           3
No. 44063 -6 -II


           transfer[ r] ed to the Washington corporation and we will all individually own
           shares in the Washington corp[ oration] in accordance with our capit[ a] l account.

CP   at   181.    The parties then engaged in ongoing discussions with attorneys and accountants to

address the potential benefits to or consequences of having the shares held by a United States

entity.


           In September 2010, Wagner told Serven that he wanted to have all of the Mexican

corporation' s stock transferred to a United States corporation " as we all previously agreed to."

CP   at   206.    Serven responded that Wagner could hold his stock in a United States corporation if

he chose to do so, even if Serven chose to hold his in the Mexican corporation. In December


2010, Wagner wrote to Serven stating that he was " perplexed by your unilateral decision to

change     the    process you,   Walker,     and   I had   agreed upon   to facilitate the   stock   transfer."   CP at


249. Serven responded that there were no beneficial reasons to hold the stock in a United States


corporation and that his decision not to do that did not affect Walker and Wagner' s ownership

interest.


           In October 2011, Walker and Wagner filed a complaint against Serven for money due on

loans     and    for   violation of   the Securities. Act   of   Washington ( WSSA),    chapter 21. 20 RCW. They

claimed that they had agreed to make advances with the understanding that the advances would

become loans if the parties could not agree on the terms of ownership in the hotel. Walker and

Wagner also made claims under the WSSA for the sale of unregistered securities and for

securities fraud and a claim for common law fraud.


            Serven filed a motion for partial summary judgment, asking that the trial court dismiss

the money due on loans claim. He argued that Walker and Wagner failed to show any facts

supporting the existence of a contract for a loan. In opposition to Serven' s motion, Walker stated

                                                                  n
No. 44063 -6 -II



that he and Wagner made a series of advances to Serven with the understanding that he and

Wagner would become shareholders in a United States entity. When he and Wagner made the

advances, he claimed that there was " a specific understanding and an agreement that these

advances would not         be for    an   investment in   a   Mexican entity." CP at 34. He further stated that


  t]here was also a clear understanding that if the parties could not reach agreement on the terms

of the   final entity that the     advances would       be    returned   to   us."   CP at 34. The trial court granted


the motion and dismissed Walker' s and Wagner' s claims for money due on loans, concluding

that Walker and Wagner had failed to show any factual basis for the existence of a loan.

          Serven again moved for partial summary judgment, seeking dismissal of Walker' s and

Wagner' s claims for sale of unregistered securities, securities fraud, and common law fraud. He

argued    that Walker'     s and   Wagner'    s   interests in the   corporation      in this   case were not " securities"




under the WSSA because they purchased their interests in one -on -one transactions with Johnston

and Seddon, respectively; because the corporate shares were never publicly offered; and because

there was no effort to solicit the sale of Johnston' s or Seddon' s interests to the public. Serven


also claimed that there was nofraud because it was only - fter Walker and Wagner invested In the _
                                                        a

hotel that the parties began discussing the option of holding the shares in a United States entity.

He further argued that the WSSA and common law fraud claims were barred by the three -year

statute of limitations because Walker and Wagner should have reasonably discovered the alleged

fraud when they purchased shares in 2006 and, at the very least, they should have discovered the

alleged fraud in 2007 when Walker began working for Serven and took over the property' s

financial records.


          Walker and Wagner responded that Serven had acted fraudulently because ( 1) he had

initially   agreed   to   create a   United States entity to hold the property in Mexico, ( 2) he refused to


                                                                 5
No. 44063 -6 -II


document the      parties'   transactions as the parties     had   agreed, (    3) he unilaterally expanded the

scope of   the   project   by   adding to the hotel'   s construction, ( 4)     he asked the parties to sign false


documents, and ( 5) he failed to provide the parties with meaningful financial information.


Regarding the statute of limitations issue, Walker and Wagner argued that between 2005 and

2010, Serven repeatedly represented to them that he would create a United States entity.

Therefore, they did not discover that he had failed to follow through on the promise until 2010 at

the earliest.



        Regarding the creation of a United States entity, Walker stated that it was Wagner' s and

his understanding that they would become shareholders in a United States entity in exchange for

the advances they had made to the corporation. He stated that there was a clear understanding

that the advances were made for the formation of a United States corporation, not a Mexican

corporation, and that if the parties could not reach agreement on the terms of the final entity, the

advances would be refunded. He stated that on June 1, 2011, it became clear to Walker and


Wagner that Serven had refused to create a United States entity or to document the transactions

as loans. -Walker further stated that he received his interest in the corporation from Serven and

no other investor, and that all of the money he paid on the project went into an account in

Serven' s name. Wagner submitted a similar declaration, but stated that he acquired all of his

interest from Serven         except   for the first $ 120, 000 that he paid to Seddon.


         The trial court granted Serven' s motion, stating in its oral ruling that Walker' s and

Wagner' s investments were not securities, Serven did not sell any securities, and there was no

securities   fraud   or common        law fraud. The trial   court    further   ruled, "   If we get to the issue of the


statute of   limitations, [ the    claims] would    be barred    by   the   statute of   limitations." Report of


Proceedings ( Aug. 31, 2012) at 21.

                                                             C
No. 44063 -6 -II



         Walker and Wagner appeal the trial court' s dismissal of all of their claims for money due
                                                                3
on   loans,   securities     fraud,   and common   law fraud .


                                                      ANALYSIS


A.       STANDARD OF REVIEW


         We review a trial court' s order granting summary judgment de novo. Loeffelholz v. Univ.

of Wash., 175 Wn.2d 264, 271, 285 P. 3d 854 ( 2012).                  Summary judgment is appropriate where,

viewing the evidence in the light most favorable to the nonmoving party, there is no genuine

issue of material fact and the moving party is entitled to judgment as a matter of law.

Loeffelholz, 175 Wn.2d at 271. " A genuine issue of material fact exists where reasonable minds


could   differ   on    the facts controlling the   outcome of       the litigation." Ranger Ins. Co. v. Pierce


County,       164 Wn.2d 545, 552, 192 P. 3d 886 ( 2008).             If reasonable minds can reach only one

conclusion on an issue of fact, that issue may be determined on summary judgment. M.
                                                                                   A.

Mortenson Co.          v.   Timberline Software    Corp., 140 Wn.2d 568, 579, 998 P. 2d 305 ( 2000).

         The moving party bears the initial burden of showing that there is no genuine issue of

material fact.        Young v. Key Pharins:,7nc., 112- Wn.2d 216;           225 -;770 - :2-
                                                                                      P       2 .- -       moving

defendant can meet this burden by showing that there is an absence of evidence to support the

plaintiff s    case.    Howell    v.   Spokane & Inland Empire Blood Bank, 117 Wn.2d 619, 624, 818 P. 2d


1056 ( 1991).      The burden then shifts to the plaintiff to come forward with sufficient evidence to

establish the existence of each essential element of the plaintiff s case. Howell, 117 Wn.2d at


625. If the plaintiff does not submit such evidence, summary judgment is appropriate. Howell,

 117 Wn.2d at 625.



3 Walker and Wagner do not contest the trial court' s dismissal of their claim for sale of an
unregistered security.


                                                            7
No. 44063 -6 -II



          A nonmoving party must present more than " mere possibility or speculation" to

successfully   oppose    summary judgment. Doe         v.    Dep' t of Transp., 85 Wn. App. 143, 147, 931

P. 2d 196 ( 1997). "[ A] non -
                             moving parry may not rely on speculation or on argumentative

assertions   that   unresolved   factual issues   remain."       White v. State, 131 Wn.2d 1, 9, 929 P. 2d 396


 1997).


B.        MONEY DUE ON LOANS CLAIM


          Walker and Wagner argue that there are genuine issues of material fact regarding whether

the contributions they made to the corporation were loans. We disagree.4
          A loan is defined as follows:


           The word loan imports an advancement of money or other personal property to a
          person, under a contract or stipulation, express or implied, whereby the person to
          whom the advancement is made binds himself to repay it at some future time,
          together with such other sum as may be agreed upon for the use of the money or
          thing advanced."

Port ofLongview v. Taxpayers ofPort ofLongview, 85 Wn.2d 216, 225, 527 P. 2d 263 ( 1974)

 internal   quotation marks omitted) (     quoting State ex rel. O' Connell v. PUD I ofKlickitat County,

79 Wn.2d 237,       2415 484 P. 2d 393 ( 197 1)).- A borrower' s promise to repay loaned-funds is an

essential element of a loan agreement. Nat' l Bank of Commerce ofSeattle v. Preston, 16 Wn.

App. 678, 680, 558 P.2d 1372 ( 1977).




4 As a preliminary matter, the portion of Walker' s and Wagner' s brief devoted to their loan claim
predominantly raises arguments and theories not argued in the trial court. They appear to argue
that there was an issue of fact as to whether the parties merely had an " agreement to agree" and
that they were entitled to restitution damages because the parties did not reach agreement and
because Serven was unjustly enriched by their contributions to the hotel project. Br. of
Appellant at 14. But below, Walker and Wagner argued only that they were entitled to a
repayment of loans made to Serven and the hotel. They did not argue the theories of unjust
enrichment and restitution that they now argue on appeal. Accordingly, we decline to address
these arguments. RAP 2. 5( a); Karlberg v. Otten, 167 Wn. App. 522, 531, 280 P. 3d 1123 ( 2012).
                                                             8
No. 44063 -6 -II



       Here, in a declaration in opposition to Serven' s summary judgment motion on the loan

claim, Walker described the nature of the payments as follows:

         3.   The advances were made with the understanding that Fred Wagner and I
       would become shareholders in a [ United States] based entity in exchange for the
       advances.        Scott Serven continued to indicate that he would cause the formation
       of such     an   entity.   However, in spite of his promises to do so he eventually
       refused to do so.


          5. There was also a clear understanding that if the parties could not reach
        agreement on the terms of the final entity that the advances would be returned to
       US.

         6.   Thus far, Serven has failed and refused to document such transactions as a
       purchase of securities in a [ United States] entity or as a loan, in accordance with
       the agreement of the parties.
         7.    On or about June 1, 2011, it became clear to [ Walker and Wagner] that
         Serven] would continue to refuse to either sell an equity interest in a [ United
        States] based entity, or to document the transactions as loans.

CP at 375. Wagner submitted a nearly identical declaration.

        Even when viewing these declarations in the light most favorable to Walker and Wagner,

no reasonable minds could differ on the absence of any fact supporting the existence of a loan.

Walker and Wagner clearly stated that they made advances to the project in exchange for shares

in a corporation.- According to their testimony, their advances would - e refunded - ri y if n0
                                                                      b            o

agreement could be reached on the form of the final entity. As a result, the evidence shows that

Walker and Wagner were making conditional investments in a corporation, not loans.

        Further, Walker and Wagner presented no evidence that Serven agreed to a loan


transaction. There was no evidence regarding independent written or oral loan agreements,

whether and in what amount interest was to be charged on the loans, or the terms of repayment.


And Walker and Wagner did not present any other evidence that a loan agreement had been

made. In fact, Walker and Wagner expressly alleged that Serven refused to document the

transaction as a loan.


                                                    9
No. 44063 -6 -II



        We hold that Walker and Wagner failed to come forward with sufficient evidence to


create a genuine issue of material fact regarding the existence of loans made to Serven.

Accordingly, the trial court did not err when it granted Serven' s motion to dismiss claims based

on that theory.

C.      SECURITIES FRAUD CLAIM


        Walker and Wagner argue that the trial court erred when it dismissed their securities

fraud claims because, as a matter of law, their investments were securities and Serven was a


seller of those securities and because there were genuine issues of material fact regarding

whether Serven made misrepresentations regarding the formation of a United States entity. Even

assuming, without deciding, that Serven was a seller of securities to Walker and Wagner, there is

no evidence supporting Walker' s and Wagner' s claim that Serven made any misrepresentations

or engaged in fraudulent or deceitful conduct upon which Walker and Wagner reasonably relied.

Therefore, we hold that Walker' s and Wagner' s securities fraud claims fail.

        1.       Securities Act of Washington


        The primary purpose of the WSSA is to protect investors from the speculative or

fraudulent schemes of promoters. Cellular Eng' g, Ltd. v. O' Neill, 118 Wn.2d' 16, 23, 820 P. 2d
941 ( 1991). "    To   accomplish   this   purpose,   the [ WSSA]   is interpreted   broadly." Kinney v. Cook,

159 Wn.2d 837, 844, 154 P. 3d 206 ( 2007).


        RCW 21. 20. 010 provides a cause of action for securities fraud:


        It is unlawful for any person, in connection with the offer, sale or purchase of any
        security, directly or indirectly:
           1) To employ any device, scheme, or artifice to defraud;
           2) To make any untrue statement of a material fact or to omit to state a
        material fact necessary in order to make the statements made, in the light of the
        circumstances under which they are made, not misleading; or



                                                          10
No. 44063 -6 -II



               To engage in any act, practice, or course of business which operates or
                3)
         would operate as a fraud or deceit upon any person.

Under the statute, a defendant is subject to liability if ( the transaction constitutes a " security ",
                                                          1)

 2) the defendant offers or sells the security, and ( 3) the defendant commits a fraudulent or

deceitful act in connection with the offer or sale. See Kinney, 159 Wn.2d at 842. We assume

without deciding that Walker and Wagner provided sufficient evidence to establish the first two

elements and address only the third element.

          2.     Misrepresentation or Fraudulent /Deceitful Act


          Walker and Wagner argue that the trial court erred when it granted Serven' s motion to


dismiss their securities fraud claims because there was a genuine issue of fact regarding whether

Serven engaged in a fraudulent or deceitful act in representing to them that a United States

corporation would be formed. We disagree.


          In   order   to   recover     for   securities   fraud   under   RCW 21. 20. 010, " the purchaser of a


security must prove that the seller and /or others made material misrepresentations or omissions

about   the security,       and   the   purchaser relied on        those   misrepresentations or omissions."   Stewart


v.   Estate of Steiner, 122 Wn.           App.     258, 264, 93 P. 3d 919 ( 2004). The purchaser need not show


an   intent to defraud. Go2Net, Inc.              v.   FreeYellow. com, Inc.,     126 Wn. App. 769, 775, 109 P.3d

875 ( 2005), aff'd, 158 Wn.2d 247, 143 P. 3d 590 ( 2006). A material fact is one to which a


reasonable person would attach importance in determining his or her choice of action in the

transaction in question. Aspelund v. Olerich, 56 Wn. App. 477, 481 -82, 784 P. 2d 179 ( 1990).

The purchaser' s reliance must be reasonable under the circumstances. FutureSelect Portfolio


Mgmt., Inc.      v.   Tremont     Grp. Holdings,         Inc.,   175 Wn. App. 840, 868, 309 P. 3d 555 ( 2013),

review granted, 316 P. 3d 495 ( 2014).



                                                                    11
No. 44063 -6 -II



           Here, Walker and Wagner argue that Serven represented that their investments would

result in the issuance of stock in a United States corporation. Walker and Wagner cite an e- mail

from Serven in 2007, in which he stated:


           Currently the most significant action we are taking is to form a Washington
           corporation that will hold all of the shares of stock in the Loreto Mission Hotel
           corporation   in Mexico.   All of the shares in the [ M] exican corporation will be
           transfer[ r] ed to the Washington corporation and we will all individually own
           shares in the Washington corp[ oration] in accordance with our capit[ a] l account.

CP   at   181.   There also was evidence that Serven' s lawyer had created a certificate of formation


and operating agreement for a Washington limited liability company.

           Walker and Wagner also point to ongoing e -mail discussions in 2010 between the

investors and their lawyer and accountant regarding the feasibility and practicality' of creating a

United States corporation. •The 2010 e =mails do not include any statements by Serven that a

United States entity would be formed, but they raise an inference that the parties believed that

such an entity might be formed. Walker and Wagner argue that Serven' s representations

regarding a United States corporation constituted securities fraud because he ultimately decided

not to form a United States corporation. -_
                                          They - lso state ill declarations that they relied on -
                                               a               -

Serven' s representation that he would create a United States entity when they made payments to




                                                     12
No. 44063 -6 -II


       5
him.


           However, Walker and Wagner provided no evidence that Serven made any

misrepresentation regarding formation of a United States corporation. A misrepresentation

requires a false statement regarding an existing fact, not a statement of a future intention. See

Havens     v.   C &D Plastics, Inc., 124 Wn.2d 158, 182, 876 P. 2d.435 ( 1994) ( negligent


misrepresentation claim).       Walker and Wagner have produced no evidence suggesting that

Serven never intended to create a United Stated corporation. Even viewing the evidence in a

light most favorable to Walker and Wagner, the record shows no more than that Severn initially

may have intended to create a United States corporation but later decided against that course of

action after consulting with lawyers and accountants.

           Further, the evidence does not reflect that Serven engaged in any deceitful or fraudulent

conduct. At best, the parties had an agreement that they would attempt to agree on the structure

of the corporation that would own the hotel. The fact that Walker and Wagner wanted to form a

United States corporation does not somehow convert Serven' s business decision not pursue that


option into a fraudulent act. Theevidence shows only that sophisticated businessmen Who had

previously worked together evaluated a number of options and then disagreed as to the




5 Walker and Wagner cite additional material in the record that does not support their position.
First, they cite two unsigned documents titled "Agreement Among Investors" that would have
increased Serven' s ownership interest in the Mexican corporation after he made additional
capital contributions when       Griffin   was unable   to pay his   portion   in 2008. CP at 160 =
                                                                                                  64, 166 -71.
But these documents make no reference to the formation of a United States entity. Second,
Walker and Wagner cite to a diagram of the entities controlling the hotel and a written document
to the same effect, both of which include a United States entity that, they argue, controlled the
project. However, the United States corporation, which Serven ultimately formed in 2008 in
Wyoming, was for the sole purpose of loaning funds to the Mexicadcorporation, not for holding
title to or managing the property.
                                                         13
No. 44063- 6- 11



appropriate course of action. These facts are insufficient to avoid summary judgment on the

WSSA claim.


         Finally, the evidence shows that Walker and Wagner could not reasonably have relied on

Serven' s statements or conduct when making contributions to the project. Again, the parties had

no more than an oral agreement to agree regarding the corporate structure, and all the parties

were exploring whether forming a United States corporation was advisable. And the evidence

indicated that Griffin, the other investor, did not approve of forming a United States corporation.

Under these circumstances, it was unreasonable for Walker and Wagner to rely on such a vague

understanding between the parties.6
          We hold that there were no genuine issues of material fact regarding whether Serven

made misrepresentations or engaged in any deceitful or fraudulent conduct regarding creation of

a United States entity to hold the shares in the Mexican corporation and whether Walker and




6
    We note that a violation of RCW 21. 20. 010 requires " proof of the seller' s material, preclosing
misrepresentation or omission."     Go2Net, 158 Wn.2d     at   253 (   emphasis added)..   The earliest

alleged misrepresentation Serven made regarding the Washington corporation. was in 2007, two
years after Walker and Wagner made their first payments. We need not decide whether conduct
after Walker and Wagner began contributing to the project could support a. WS SA claim.

                                                    14
No. 44063 -6 -II



Wagner reasonably relied on those representations in making their contributions to the project.

Accordingly, the trial court did not err in granting summary judgment on the securities fraud

claim.8

D.        COMMON LAW FRAUD CLAIM


          Walker and Wagner argue that the trial court erred when it dismissed their common law

fraud claim because there was a genuine issue of material fact as to whether Serven' s acts were

fraudulent. We disagree.


          The standard for common law fraud is more stringent than for securities fraud. For

instance, for common law fraud the plaintiff must prove an actual intent to deceive. Go2Net, 126


Wn. App. at 775. To support a claim for common law fraud, the plaintiff must prove by clear,

cogent and convincing evidence:


           1)   representation of an        existing fact; ( 2) materiality; ( 3)   falsity; ( 4)   the speaker' s
          knowledge      of falsity; ( 5) intent of the speaker that it should be acted upon by
                              its
          the   plaintiff, (6)           ignorance of its falsity; ( 7) plaintiff' s reliance on the
                                    plaintiff' s

          truth of the representation; ( 8) plaintiff' s right to rely upon it; and ( 9) damages

          suffered by the plaintiff.

Stiley v Block, 130 Wn:2d 486, 505, 925 P.-2d 194 ( 1996):




7
    Walker and Wagner also argue that Serven violated the WSSA because he failed to disclose his
decision to expand the project' s scope and that " Serven asked [ Walker and Wagner] to sign and
backdate proxies with regard to the Mexican corporation that were materially false and
deceptive." Br. of Appellants at 23 -24. But Walker and Wagner do not attempt to show any
alleged misrepresentation or omission was material or deceitful and they do not attempt to show
that they relied on the misrepresentations or omissions. They also argue that Serven violated the
WSSA because he failed to record their capital transfers and failed to provide them with
financial information, but fail to cite any evidence in the record supporting the alleged material
issues of fact. Accordingly, we decline to address these arguments further.

8 Because we hold that the trial court properly dismissed Walker' s and Wagner' s securities fraud
claims, we need not address whether the statute of limitations barred these claims.
                                                              15
No. 44063 -6 -II



         When reviewing a claim on summary judgment for which the burden of proof is clear,

cogent, and   convincing        evidence, "   we must determine whether, viewing the evidence in the light

most favorable to the nonmoving party, a rational trier of fact could find that the nonmoving

party   supported   his   or   her   claim with clear, cogent, and       convincing    evidence."   Woody v. Stapp,

146 Wn.    App.   16, 22, 189 P. 3d 807 ( 2008). In           other words, "   the challenging party must offer

evidence   establishing        a prima   facie   case   supporting the   claim or   defense."   Woody, 146 Wn.

App. at 22.

         We hold that the evidence Walker and Wagner presented at summary judgment does not

withstand the heightened burden for common law fraud. First, Walker and Wagner did not

allege that Serven made a representation of an existing fact. Instead, they alleged that he

misrepresented his intention to create a United States entity in the future. Second, nothing in the

record established that the representations were false when made or that Serven knew that the


representations were false. When he made the representations, Serven may well have intended to

create a United States entity. Third, Walker and Wagner did not show that they had a right to

rely onwhat essentially was an " agreement -o-agree" with regard to the-issuance of stoc - m a
                                           t

United States corporation.


         Walker and Wagner failed to submit evidence sufficient to create a question of fact


regarding common law fraud, particularly under the clear, cogent and convincing standard.

Accordingly, we hold that the trial court properly granted summary judgment on Walker' s and

Wagner' s claim for common law fraud.




                                                               16
No. 44063 -6 -II


        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.




                                                                         J.
                                                    MAXA, J.




                                                  17
