      IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

UNION BANK, N.A., successor-in-
interest to the Federal Deposit                 DIVISION ONE
Insurance Corporation, as receiver of                                            c=>
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Frontier Bank,                                  No. 72805-9-1
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                                                 PUBLISHED OPINION
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JOHN T. BLANCHARD and JANE DOE                                                 ro

BLANCHARD, husband and wife;
RANDY S. PREVIS and KATIE L.
PREVIS, husband and wife,

                      Appellants.                FILED: June 6, 2016


      Dwyer, J. —When Wellington Hills Park, LLC defaulted on a debt owed to

Union Bank, Union commenced this action on commercial guaranties executed

by John Blanchard, Randy Previs, and Katie Previs (the guarantors) securing

that debt. The guarantors asserted numerous affirmative defenses and
                                                                                       WAS
counterclaims in response, but the trial court concluded that Union was entitled to
                                                                                             APPE
judgment as a matter of law on its claims and dismissed the guarantors'

counterclaims. Because the trial court was correct to enforce the absolute and

unconditional guaranties and the guarantors do not establish a genuine issue of

material fact with regard to their claims and defenses, we affirm.
No. 72805-9-1/2




       A. Blanchardand the Previses give guaranties of borrower's
indebtedness to Frontier Bank

       Wellington Hills Park (borrower) is a limited liability company that owned

the Wellington Hills Business Campus in Woodinville (the property). Its members
are Randy and Katie Previs (85 percent owners), who are long-time real estate
investors and developers, and John Blanchard (15 percent owner), "an

experienced business and real estate attorney," who also served as borrower's
general counsel.

        In 2005, borrower obtained a construction loan to develop the property

from Frontier. Borrower executed a promissory note evidencing the debt owed to
Frontier.1 The note was secured by a construction deed oftrust that encumbered
the property and an assignment of rents. It was also secured by individual
guaranties executed by Blanchard and each of the Previses (the guaranties).
        As part of the loan transaction, Blanchard and the Previses each signed
three documents. Specifically, they each signed the note as a member of
borrower, signed an individual commercial guaranty, and signed the final loan
agreement twice—first as a member of borrower, then as a guarantor.2
        Borrower defaulted on the note when it came due on January 5, 2010.

        6. Frontier fails and Union buys Frontier's assets from the Federal
Deposit Insurance Corporation (FDIC), including the note and guaranties
        On April 30, 2010, the Washington State Department of Financial

         1The original debt principal was $19,500,000 but this amount was increased to
$36,700,000 pursuant to a "change in terms" agreement.
         2Blanchard and the Previses signed similar final loan agreements (called "Notice[s] of
 Final Agreement") each time the terms of the note changed, as well as when they signed the
 construction loan commitment letter.


                                                -2-
No. 72805-9-1/3


Institutions closed Frontier. The FDIC was appointed as the receiver to liquidate

Frontier and wind up its affairs. The same day, Union purchased certain of

Frontier's assets from the FDIC, including the note and the guaranties. With

respect to the assets it purchased, Union succeeded to the FDIC's rights as
Frontier's receiver. The FDIC also authorized Union to avail itself of statutory

protections available to the FDIC and its assignees.

       The final day to file claims against Frontier with the FDIC was August 4,

2010; neither Blanchard nor the Previses filed claims by that deadline.

       C. The Snohomish County Superior Court appoints a receiver for
borrower and the property; Appellants actively oppose the acts of the receiver
       On November 19, 2010, Union filed an application for the appointment of a

custodial receiver for borrower and the property in Snohomish County Superior

Court (the receivership court).3 On December 21, 2010, the receivership court
entered its order appointing Turnaround Inc. as custodial receiver.
       On July 27, 2011, Union moved to convert the custodial receivership to a
general receivership. Blanchard and Randy Previs opposed the motion. The
receivership court entered an order converting the case to a general receivership
and appointing Turnaround as general receiver, which became effective on
November 17, 2011.

       On December 19, 2011, the receiver gave notice of the deadline to file

proofs of claim in the receivership. Blanchard, the Previses, and Randy Previs,
as assignee of Veritas Development, Inc. (Veritas),4 filed claims.
       On April 27, 2012, the receiver moved for an order approving a settlement

       3 Cause No. 10-2-09992-0.
       4Veritas is a company formally owned by the Previses' daughter, Ashley Previs.
No. 72805-9-1/4


agreement and release of claims in connection with a soft cost insurance claim

previously asserted by borrower. Blanchard and Randy Previs opposed the

settlement. On June 1, 2012, the receivership court entered an order approving

the settlement agreement and release of claims. In support of its order, the court

found "that the [agreement is fair and equitable, and in the best interests of the

estate and its creditors, and that the responses or objections should be over

ruled."

          On July 26, 2012, the receiver moved the receivership court for an order
to approve bid procedures for the sale of the property. On August 31, 2012, the
court granted the motion and entered its bid procedures order.
          On January 23, 2013, the receiver gave notice ofthe successful bidder
underthe bid procedures order and set a hearing to approve the sale.
Blanchard, Randy Previs, and Veritas opposed the proposed sale. On January
31, 2013, the receivership court approved the sale of the property by a purchase
and sale agreement between the receiver and OIBP Wellington Hills, LLC (OIBP)
for a purchase price of $10,850,000.

          On February 8, 2013, Randy Previs and Veritas sought revision of the sale
order, but their revision motion was denied. On March 25, 2013, they filed a
notice of appeal ofthe sale orderwith this court.5
          Blanchard and the Previses did not post the $7,102,611 bond required to

supersede the judgment and stop the sale. Instead, they had borrower declare
bankruptcy.




          5 No. 70106-1-1.



                                           -4-
No. 72805-9-1/5


       D. Borrower declares bankruptcy; the bankruptcycourt rejects Appellants'
opposition and directs the sale of the property

      On August 20, 2013, borrower filed a Chapter 7 bankruptcy case in the

United States Bankruptcy Court for the Western District of Washington (the

bankruptcy court).6 The Chapter 7 voluntary petition was signed by Randy

Previs, as borrower's managing member.

      On September 13, 2013, the Chapter 7 trustee (the trustee) filed a motion

requesting that the bankruptcy court approve the sale of the property to OIBP

and stating that "assurance and speed of closing" were critical and that "the

Trustee cannot ignore the history of the dispute and the decisions made by the
Receiver, the tenant, the Bank, the County, the Superior Court and the Court of

Appeals."

      The trustee also filed his own declaration in support of the sale, stating:

       I have concluded, based on the facts and circumstances of this
       case, that I should seek Bankruptcy Court approval to sell the
       Property to OIPB Wellington Hills, LLC, pursuant to essentially the
       same terms as those agreed to in the state court receivership
       case. ... I have determined it is not in the best interest of the
       estate and its creditors to accept the offer of Veritas and put it
       before the Court for approval, or to open up this matter to an
       auction or to a new marketing process.

       Veritas and Blanchard filed objections to the trustee's motion. Randy

Previs, under the letterhead of Seavestco, Inc., filed an objection both to the
trustee's motion and to the receiver's continued control of the property pending

its sale. On October 16, 2013, the bankruptcy court granted the trustee's motion,

made findings, and entered its order approving the sale of the property.

       On October 30, 2013, Veritas filed a notice of appeal from the bankruptcy

       6 Case No. 13-17546-KAO.



                                          -5-
No. 72805-9-1/6



sale order.

       On November 26, 2013, the sale of the property closed and, from the sale

proceeds, the closing agent disbursed $9,696,411.88 to Union pursuant to its

construction deed of trust.

      E. The bankruptcy court enforces the guaranties and subordinates
Appellants'proofs of claim to Union's claim

       Blanchard, the Previses, and Veritas, by Randy Previs as its assignee,

filed proofs of claims in the bankruptcy case.

       On March 31, 2014, Union moved for summary judgment against

Blanchard and the Previses on the ground that the subordination provision in the

guaranties subordinated their proofs of claim to Union's claims. In their
opposition to the motion, Blanchard and the Previses argued that "Union Bank's
conduct in conducting the receivership of Wellington Hills Business Park was

substantively unconscionable, rendering the personal guaranties—including the
subordination clause—unenforceable."

       On May 27, 2014, the bankruptcy court entered summary judgment in
favor of Union, upholding the guaranties, enforcing the subordination provisions
in the guaranties, and holding that "all distributions on [Appellants'] claims must
be paid to Union Bank."

       F. The receivership and bankruptcy case appeals are voluntarily
dismissed with prejudice; the cases are closed

       On December 23, 2013, Veritas, borrower, and the trustee agreed to

dismiss with prejudice the appeal from the bankruptcy sale order. The appeal
was dismissed with prejudice on December 31, 2013. On January 30, 2015, the
No. 72805-9-1/7


bankruptcy court entered its order discharging the trustee and closing the case.

       On January 7, 2014, Randy Previs and Veritas moved this court to

withdraw its appeal of the sale order of the receivership court. The appeal was

dismissed on January 23, 2014. On December 18, 2014, the receivership court

entered an order approving the receiver's final report and discharging the

receiver.

       G. This action is commenced; Appellants assert affirmative defenses and
counterclaims

       On March 29, 2013, while the receivership case was pending and before

the bankruptcy case was commenced, Union filed this action for judgment on the
guaranties in the King County Superior Court. In response, the guarantors
asserted numerous affirmative defenses and counterclaims. On October 10,

2014, the superior court granted summary judgment in favor of Union and
against the guarantors, determining that Union was entitled to judgment as a
matter of law and dismissing the guarantors' claims with prejudice. On
December 9, 2014, after their motion for reconsideration was denied, the

guarantors filed the underlying notice of appeal.
                                          II


       The guarantors argue that the trial court erred by granting summary
judgment to enforce the guaranties. This is so, they assert, because a material
dispute of fact exists as to whether the guaranties are void or voidable. They are
incorrect.

        We review the grant of summary judgment de novo, undertaking the same
 inquiry as the trial court. Jones v. Allstate Ins. Co., 146 Wn.2d 291, 300, 45 P.3d
No. 72805-9-1/8


1068 (2002). Summary judgment is appropriate only if the supporting materials,

viewed in the light most favorable to the nonmoving party, demonstrate "that

there is no genuine issue as to any material fact and that the moving party is

entitled to a judgment as a matter of law." CR 56(c); Hartley v. State, 103 Wn.2d
768, 774, 698 P.2d 77 (1985). A "'complete failure of proof concerning an

essential element of the nonmoving party's case necessarily renders all other

facts immaterial.'" Young v. Key Pharm.. Inc., 112 Wn.2d 216, 225, 770 P.2d

182 (1989) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct.
2548,91 L. Ed. 2d 265 (1986)).

       Union contends that each of the guarantors' claims and defenses is

foreclosed by enforcement ofthe guaranties, together with application of the
state statute of frauds and the federal D'Oench7 doctrine, as codified at 12

U.S.C. § 1823(e). Thus, before addressing the specific assertions made by the
guarantors herein, we begin by examining these proposed bases for rejecting the
guarantors' claims and defenses.

                                             A


        Union asserts that the guaranties are absolute and unconditional promises
to pay borrower's debt and that the guarantors waived nearly all claims and
defenses to making such payment. We agree.

        We recently summarized general principles relevant to the enforceability
of absolute and unconditional guaranties.

              "A 'guaranty' 'is a promise to answer for the debt, default, or
        miscarriage of another person.' 'A contract of guaranty, being a

        7 D'Oench. Duhme &Co. v. Fed. Deposit Ins. Corp., 315 U.S. 447, 62 S. Ct. 676, 86 L
 Ed. 956(1942).


                                             -8-
No. 72805-9-1/9


      collateral engagement for the performance of an undertaking of
      another, imports the existence of two different obligations, one
      being that of the principal debtor and the other that of the
      guarantor.'" fSauterv. Houston Cas. Co., 168 Wn. App. 348, 356,
      276 P.3d 358 (2012) (citation omitted) (internal quotation marks
      omitted) (quoting Wilson Court Ltd. P'ship v. Tony Maroni's. Inc.,
      134Wn.2d 692, 707, 952 P.2d 590 (1998)).] A guaranty'"is
      independent'" of the debt, "'and the responsibilities which are
      imposed by the .. . guaranty differ from those . .. created by the
      contract to which the guaranty is collateral.'" rWilson Court Ltd.
      P'ship, 134 Wn.2d at 707 (quoting Robev v. Walton Lumber Co., 17
      Wn.2d 242, 255, 135 P.2d 95 (1943)); accord Freestone Capital
      Partners, LP v. MKA Real Estate Opportunity Fund I. LLC, 155 Wn.
      App. 643, 661, 230 P.3d 625 (2010).] "A written guarantee of
      payment of the principal's indebtedness . . . [is] governed by its own
      terms." rMcAllister v. Pier 67. Inc., 1 Wn. App. 978, 983, 465 P.2d
      678(1970).]

              "[W]here a guarantorfreely and voluntarily guarantees the
      payment of another, and a creditor relies to its detriment on this
      guaranty, the law generally requires the guaranty to be enforced."
      fin re Spokane Concrete Prods.. Inc., 126 Wn.2d 269, 278, 892
      P.2d 98 (1995).] "'An absolute guaranty is an unconditional
      undertaking on the part ofthe guarantor that the person primarily
      obligated will make payment or will perform, and such a guarantor
      is liable immediately upon default of the principal without notice.'"
       rCenturv 21 Prods.. Inc. v. Glacier Sales, 129 Wn.2d 406, 414, 918
       P.2d 168 (1996) (quoting Joe Heaston Tractor &Implement Co. v.
       Sec. Acceptance Corp., 243 F.2d 196 (10th Cir. 1957)); see also
       Gravson v. Platis. 95 Wn. App. 824, 826, 978 P.2d 1105 (1999).]
       "An absolute and unconditional guaranty should be and is
       enforceable according to its terms. The courts are to enforce it as
       the parties meant it to be enforced, with full effect given to its
       contents, and without reading into it terms and conditions on which
       it is completely silent." fNat'l Bank ofWash, v. Equity Inv'rs, 81
       Wn.2d 886, 919, 506 P.2d 20 (1973).]

Frontier Bank v. Binao Invs.. LLC. 191 Wn. App. 43, 53-54, 361 P.3d 230 (2015)

(some alterations in original).

       Just as guaranties may be absolute and unconditional, so may they waive
claims and defenses. Waiver provisions in guaranties are uniformly upheld and
enforced by Washington courts, including on summary judgment. Old Nat'l Bank


                                          -9-
No. 72805-9-1/10


of Wash, v. Seattle Smashers Corp.. 36 Wn. App. 688, 691, 676 P.2d 1034

(1984) (upholding waiver of consent of guarantor to grant borrower extension of
time because "the language of the guaranty is determinative"); Fruehau Trailer

Co. of Canada Ltd. v. Chandler, 67 Wn.2d 704, 709, 409 P.2d 651 (1966)

(upholding waiver of defense of release or discharge of principal obligation
because "the [relevant] provision of the agreement constituted a full and

complete waiver by the guarantors"); Gravson v. Platis, 95 Wn. App. 824, 834,
978 P.2d 1105 (1999) (upholding waivers of right of recourse against lender and
of defense based on lender's acceptance of deed in lieu); Columbia Bank. N.A. v.

New Cascadia Corp., 37 Wn. App. 737, 739-40, 682 P.2d 966 (1984) (upholding

waivers of consent of guarantor to grant borrower extension oftime and to

release co-guarantor).

       There is no dispute as to the language ofthe guaranties herein at issue.

They clearly state that they are absolute and unconditional.
       AMOUNT OF GUARANTY. The amount of this Guaranty is
       Unlimited.

       CONTINUING UNLIMITED GUARANTY. Forgood and valuable
       consideration, [Guarantor] absolutely and unconditionally
       guarantees and promises to pay to [Lender] or its order, in legal
       tender of the United States of America, the Indebtedness ... of
       [Borrower] to Lender on the terms and conditions set forth in this
       Guaranty. Under the Guaranty, the liability of Guarantor is
       unlimited and the obligations of Guarantor are continuing.

(Emphasis added.)

       The guaranties also contain clear waiver provisions, which state that the
 guarantor "waives any and all rights or defenses . . . given to guarantors at law or



                                         •10-
No. 72805-9-1/11


in equity other than actual payment and performance of indebtedness."8 They
also state that the guarantor "waives and agrees not to assert or claim .. . any

deductions to the amount guaranteed under this Guaranty for any claim of setoff,

counterclaim, counter demand, recoupment or similar right." The guaranties

further state that the guarantor "warrants and agrees that each of the waivers set

forth above is made with Guarantor's full knowledge of its significance and

consequences and that... the waivers are reasonable and not contrary to public
policy or law."

        There can be no serious dispute that the express terms of the guaranties

make them unconditional guaranties of payment and waive nearly all
counterclaims and defenses, except payment. Accord Frontier Bank, 191 Wn.
App. at 54 (so construing a substantially similar guaranty); In re Cronev, 2011
WL 1656371 (Bankr. W.D. Wash. May 2, 2011) (same). Accordingly, if the
guaranties herein are enforceable, the only defense remaining to the guarantors
would be actual payment (which they do not assert). Furthermore, because the
promissory notes that these guaranties support are delinquent, the obligations of
the guarantors would also be delinquent.

                                                 B


        Union also asserts that the state statute of frauds operates to foreclose

some of the guarantors' claims and defenses. We agree.
        Washington's statute of frauds bars the enforcement of credit agreements
 that are not in writing:


         8This specifically includes: "any right to claim discharge of the Indebtedness on the basis
 ofunjustified impairment ofany collateral for the Indebtedness."

                                                -11-
No. 72805-9-1/12


      A credit agreement is not enforceable against the creditor unless
      the agreement is in writing and signed by the creditor. The rights
      and obligations of the parties to a credit agreement shall be
      determined solely from the written agreement, and any prior or
      contemporaneous oral agreements between the parties are
      superseded by, merged into, and may not vary the credit
       agreement. Partial performance of a credit agreement does not
       remove the agreement from the operation of this section.

RCW 19.36.110 (emphasis added).

       A "credit agreement" is defined as:

       an agreement, promise, or commitment to lend money, to otherwise
       extend credit, to forbear with respect to the repayment of any debt
       or the exercise of any remedy, to modify or amend the terms under
       which the creditor has lent money or otherwise extended credit, to
       release any guarantor. . . , or to make any other financial
       accommodation pertaining to a debt or other extension of credit.

RCW 19.36.100.

       Herein, the guarantors assert that Frontier made them various promises to

extend them further credit, including by giving them a "mini-perm" loan9 in 2009,
when it appeared as if borrower would be unable to continue making payments
due on the loan. In support ofthis assertion, the guarantors point to multiple "risk
assessment report[s]" by Frontier, some ofwhich acknowledge the possibility that
borrower will need additional credit in order to stay current on loan payments,

and a "loan memorandum," which appears to be an application for the mini-perm

loan in question. As an initial matter, none ofthese documents actually includes
a promise to extend credit. More to the point, none is signed by a Frontier




       9Amini-perm loan is a temporary loan issued by banks as bridge funding for a
development loan from construction to tenancy.


                                             -12-
No. 72805-9-1/13


representative.10 Therefore, the guarantors' reliance on these documents is

barred as proof of the purported promises by the statute of frauds.

       There is no documentary evidence of the existence of any credit

agreement between Frontier or Union and the guarantors, aside from the
undisputed loan agreements, promissory note, and guaranties at the heart ofthe
controversy, whose existence and terms are undisputed.
                                                C

        Union also asserts that application of the federal D'Oench doctrine further

limits the claims and defenses available to the guarantors. We agree.

        "The federal D'Oench doctrine prohibits a party from asserting a
        cause of action against the FDIC orits assignees based upon
        unwritten agreements or other schemes alleged to be entered into
        by a failed bank. Lanalev v. Fed. Deposit Ins. Corp.], 484 U.S. 86,
        92-93 108 S. Ct. 396, 98 L. Ed. 2d 340 (1987). In D'Oench M
        Duhme & Co. v. FDIC, 315 U.S. 447, 62 S. Ct. 676, 86 L. Ed. 956
        (1942), the United States Supreme Court enunciated this doctrine,
        which is intended to protectthe FDIC andits assignees from
        fraudulent schemes by borrowers offailed institutions. The doctrine
        also protects the FDIC by allowing bank representatives to rely
        solely on the records of the bank in evaluating the bank's financial
        condition, rather than leaving it exposed to suits founded on
        undisclosed conditions or deceptive documents. [Fed. Deposit Ins.
        Corp.1 v. Zook Bros. Constr. Co., 973 F.2d 1448, 1450-51 (9th Cir.
        1992)."

Frontier Bank, 191 Wn. App. at 63-64 (emphasis added) (alterations in original)
(quoting Kananv v. Union Bank. N.A., No. C11-6062 RJB, 2012 WL 5258847, at
*5 (W.D. Wash. Oct. 24, 2012)): accord Nw. Land &Inv.. Inc. v. New W. Fed.
 Sav. &LoanAss'n. 64 Wn. App. 938, 943, 827 P.2d 334 (1992) (The D'Oench
 doctrine "bars a borrower from asserting ... any claim or defense based on any

         10 The guarantors assert that one of these reports was signed by three representatives of
 Frontier. In fact, the worksheet to which they refer is separate from any report that mentions the
 "mini-perm" in any way.


                                                -13-
No. 72805-9-1/14


unrecorded agreement which alters the terms of a seemingly unqualified

obligation to pay").

       The D'Oench doctrine was codified at 12 U.S.C. § 1823(e), as part of the

Federal Deposit Insurance Act. That provision provides, in pertinent part:

               No agreement which tends to diminish or defeat the interest
       of the [FDIC] in any asset acquired by it under this section or
       section 1821 of this title, either as security for a loan or by purchase
       or as receiver of any insured depository institution, shall be valid
       against the [FDIC] unless such agreement—
               (A) is in writing,
               (B) was executed by the depository institution and any
       person claiming an adverse interest thereunder, including the
       obligor, contemporaneously with the acquisition ofthe asset by the
       depository institution,
               (C) was approved bythe board of directors of the depository
       institution or its loan committee, which approval shall be reflected in
       the minutes of said board or committee, and
               (D) has been, continuously, from the time of its execution, an
       official record of the depository institution.

12 U.S.C. § 1823(e)(1) (emphasis added).

        Contracts that do not meet these requirements "cannot be enforced even

when a bank fraudulently induces a customer with oral misrepresentations, or
when a customer is completely innocent." Nw. Land, 64 Wn. App. at 943; accord
Lanqlev, 484 U.S. at 93 ("We conclude . . . that neither fraud in the inducement
nor knowledge by the FDIC is relevant to the section's application. No
conceivable reading ofthe word 'agreement' in § 1823(e) could cause it to cover
a representation orwarranty that is bona fide but to exclude one that is
fraudulent."); Frontier Bank. 191 Wn. App. at 66-67 (applying Lanqley).
 Responding to the perceived unfairness of this result, the Supreme Court stated:
               The short of the matter is that Congress opted for the
        certainty ofthe requirements set forth in § 1823(e). An agreement


                                           -14-
No. 72805-9-1/15


       that meets them prevails even ifthe FDIC did not know of it; and an
       agreement that does not meet them fails even if the FDIC knew. It
       would be rewriting the statute to hold otherwise.

Lanqlev, 484 U.S. at 95.

        The FDIC authorized Union to avail itself of the protections provided

pursuant to this statute,11 and Union does so herein.

        The application ofthis statute to the guarantors' affirmative defenses is
similar to our application ofthe state credit agreements statute of frauds. That is,
the federal statute, for largely the same reasons, bars consideration of the
documents upon which the guarantors primarily rely.12 However, the federal
statute is independently relevant. For one, the circumstances herein are the
precise target of the law, which was meant to protect purchasers of FDIC assets
acquired from failing financial institutions. Moreover, prior applications of this law
to analogous circumstances make clear that not even fraud on the part of the
failed financial institution—coupled with knowledge on the part of the acquiring
institution—removes an alleged credit agreement from the statute'stechnical

requirements.

        Thus, the guarantors' argument regarding separate financial
arrangements made with Frontier are foreclosed by state and federal laws that


         11 While the guarantors attempt to castdoubt upon this fact (Blanchard stated, for
example, "Randy Previs and Iwere left completely out of th[e] process [of obtaining the FDIC's
permission] and to this day Ihave no idea how the Union Bank consent request was worded or
what information it contained. ... Iam in the dark about that."), the only relevant record evidence
 indicates that Union obtained the required permission from the FDIC.
         12 As for the signed worksheet upon which the guarantors seek to rely, because it was
signed by only Frontier, even if—contrary to our conclusion—it were to pass muster under the
 state statute, it would nevertheless fall short under the federal statute. Indeed, Blanchard
 acknowledged as much in a declaration submitted to the trial court, which stated, in pertinent part,
 "our arrangements with Frontier Bank may not meet all of the strict (unrealistic and unfair)
 standards of D'Oench."


                                                 -15-
No. 72805-9-1/16


require such agreements to comply with certain technical requirements.

      We turn now to the propriety of the trial court's order on summary

judgment.

                                          D


      The guarantors raise a number of claims and defenses to Union's action

on the guaranties. These can be generalized into three categories: fraudulent

inducement to enter into the guaranties, fraudulent inducement to contribute

additional funds to the property development project, and misconduct by Union

after acquiring the guaranties, particularly in the course of the receivership and

bankruptcy proceedings.

                                           i


       Fraud in the inducement by Frontier- the guaranties: The guarantors first

contend that they were fraudulently induced to sign the guaranties by
representations made by Frontier that, if necessary, it would extend borrower
further credit to fund the project through tenancy. This contention fails for several

reasons.


       Initially, the guarantors' claim relies on alleged unwritten credit
agreements. Accordingly, it is barred by the state statute offrauds and the
federal D'Oench doctrine.

       Furthermore, even were we to consider the guarantors' allegations, their

claim would nevertheless fail because they did not properly plead it or offer

sufficient evidence in support thereof to withstand summary judgment.

       Fraud must be pleaded with particularity. CR 9(b). Particularity
       requires that the pleading apprise the defendant of the facts that


                                         -16-
No. 72805-9-1/17


       give rise to the allegation of fraud. See Pedersen v. Bibioff. 64 Wn.
       App. 710, 721, 828 P.2d 1113(1992); Harstad v. Frol, 41 Wn. App.
       294, 301-02, 704 P.2d 638 (1985). . . .
                The elements of fraud include
                (1) representation of an existing fact; (2) materiality;
                (3) falsity; (4) the speaker's knowledge of its falsity;
                (5) intent of the speaker that it should be acted upon
                by the plaintiff; (6) plaintiff's ignorance of its falsity; (7)
                plaintiff's reliance on the truth of the representation;
                (8) plaintiffs right to rely upon it; and (9) damages
               suffered by the plaintiff.
       Stilev v. Block, 130 Wn.2d 486, 505, 925 P.2d 194 (1996).

Adams v. King County, 164 Wn.2d 640, 662, 192 P.3d 891 (2008).

       The guarantors' claim falls critically short because they did not plead or
offer evidence that, even if a representation was made regarding future credit

agreements, it was false when made and made with knowledge of its falsity.13


        Fraud in the inducement by Frontier- additional contributions: The

guarantors assert that they were induced to make additional financial
contributions to the property development project by Frontier's fraudulent
promises to extend them further credit in exchange for their payments. At the
outset, this contention fails for the same reason as did the fraudulent inducement
C|aim_that is, because it relies on unsigned credit agreements, it is barred by

the state statute of frauds and the federal D'Oench doctrine.

        In addition, the guarantors failed to properly plead or offer sufficient


        13 The guarantors also obliquely contend that they were fraudulently induced to enter into
the guaranties because Frontier was likely already in financial trouble atthe time they agreed to
them. Specifically, in their opening brief, the guarantors state, "Appellants believe it is likely that
Frontier Bank was 'in trouble' financially and not in compliance with applicable bank regulations at
the time the original Wellington Construction Loan (and Appellants signed the Guaranty) was
made." Br. of Appellant at 21. This iteration of the fraudulent inducement claim also suffers from
poor pleading and insufficient proof. The guarantors do not establish, among other things, a
relevant "representation."


                                                 -17-
No. 72805-9-1/18


evidence in support of their claim. Specifically, assuming that Frontier did

promise to extend further credit, they did not plead (and offered no evidence that)

the maker of this promise knew it to be false at the time made. Instead, the

guarantors repeatedly assert that Frontier reneged on the promise. This is

insufficient.

        Finally, this particular fraudulent inducement claim also fails because it is

unrelated to the guarantors' decisions to enter into the guaranties. Even were we

to assume the veracity of the guarantor's contentions, they would not cast light

on the validity of the guaranty. Because it does not undermine the validity ofthe
guaranties, this claim falls into the set of claims and defenses that were waived in
the guaranties.

                                                iii


        Misconduct by Union after procuring the guaranties: The guarantors also
assert claims of misconduct by Union. Their first contention is that Union,

through actions taken in the receivership and bankruptcy cases, impaired the
value of the loan collateral (i.e., the property). They also contend that Union did

not work in good faith with them to sell the property for the highest price.14
        Initially, all ofthe guarantors' claims with respect to Union are barred by
the terms of the guaranties. Having determined that the guaranties are
enforceable despite the fraud alleged by the guarantors, it follows that the waiver
provisions apply. Pursuant to these provisions, the guarantors waived claims
and defenses to nonpayment, including those asserted herein.

        14 See Reply Brief ofAppellant at 20 ("[T]he ultimate and most egregious bad faith in this
matter is Union Bank's repeated refusal to even look at multiple opportunities to realize millions of
dollars more for [the property].").


                                               -18-
No. 72805-9-1/19


         The argument regarding Union's alleged misconduct in the receivership

and bankruptcy cases suffers from two additional critical flaws. First, the

guarantors incorrectly attribute decisions that were made by the receiver or the

trustee to Union. To the extent that the guarantors mean, literally, that the

actions in question were taken by Union, they simply misstate the record.

However, their argument seems to be that, although Union did not literally make
the decisions in question, those decisions are nevertheless attributable to Union.

The attribution is based, we assume, on an unspecified principal-agent

relationship. This argument is nothing more than speculation and, therefore,

fails.

         The argument also overlooks the role of the court in the allegedly improper
actions. A receiver is "a person appointed by the court as the court's agent, and
subject to the court's direction, to take possession of, manage, or dispose of
property of a person." RCW 7.60.005(10). The power to appoint a receiver is
within the trial court's discretion. King County Dep't of Cmtv. & Human Servs. v.

Nw. Defenders Ass'n, 118Wn. App. 117, 122, 75 P.3d 583 (2003). Likewise, a

trustee in bankruptcy is an officer of the court. In re Castillo, 297 F.3d 940, 946
(9th Cir. 2002): accord Leonard v. Vrooman, 383 F.2d 556, 560 (9th Cir. 1967)
(noting that a trustee in bankruptcy is an officer of the court and is not subject to
suit without leave ofthe appointing court for acts done in his official capacity and
within his authority); Vass v. Conron Bros. Co., 59 F.2d 969, 970 (2d Cir. 1932)
 (holding that a bankruptcy trustee, like a receiver, is an officer of the court, and
trustee's possession is protected because it is the court's). At the time of the



                                          -19-
No. 72805-9-1/20


alleged misconduct by the receiver and the trustee, they were subject to the
continuing authority of the court, which ratified each of the challenged decisions.

The guarantors were clearly dissatisfied by the result of those proceedings, but

they may not make them the subject of this action by incorrectly attributing them

to the only other party appearing in the caption.15
        The guarantors also assert that Union violated a duty of good faith to them
by refusing to consider alternate arrangements for extracting value from the
property.

               "'[A]n implied duty of good faith and fair dealing [is] imposed
        on the parties to a contract.'" Miller v. U.S. BankofWash.. N.A..
        72 Wn. App. 416, 425, 865 P.2d 536 (1994) (quoting Betchard-
        Clavton. Inc. v. King, 41 Wn. App. 887, 890, 707 P.2d 1361
        (1985)).] With guaranties, "the creditor's [implied] covenant ofgood
        faith is to diligently pursue collection of the debt, and the guarantor
        may be relieved of liability on the debt where the creditor does not
        exercise due diligence in collection of that debt." [|dj
               But this court has "specifically limited claims by guarantors
        against lenders, including breach ofgood faith claims, to
        performance of specific contract terms." fGravson, 95 Wn. App. at
        833]. Absolute guarantors lack "'any recourse against the lender
        unless it is alleged and proved that the lender acted in bad faith.'"
        [Id at 831 (emphasis added) (quoting Nat'l Bank ofWash., 81
        Wn.2d at 920).] As previously stated, this court has held that "'a
         guarantor cannot rely upon the relationship between a lender and a

        15 The guarantors' claims regarding actions taken in the receivership and bankruptcy
cases also fail because they actively participated in those proceedings by, among other things,
filing proofs of claim and opposing any sale of the property.
         RCW 7.60.190, entitled, "Participation ofcreditors and parties in interest in receivership
proceeding-Effect of court orders on nonparties," provides that creditors and parties who receive
notice, have actual knowledge of, and actively participate in receivership proceedings are bound
by the acts of the receiver and the order of the receivership court, regardless of whether they are
formally joined as parties. The same principles apply to acts of the bankruptcy trustee and orders
of the bankruptcy court. Lanoenkamo v. Culp. 498 U.S. 42, 45, 111 S. Ct. 330, 112 L Ed. 2d 343
(1990) (by filing a proof of claim, one submits himself to the jurisdiction of the bankruptcy court);
 In re Farmland Indus.. Inc.. 376 B.R. 718, 727 (Bankr. W.D. Mo. 2007) (bankruptcy court sales
 order is binding on entity that participated in bankruptcy case sale motion and that entity cannot,
 in another lawsuit, challenge the sale as improper).
         Because the guarantors filed proofs ofclaim in both the receivership and the bankruptcy
 cases and because they contested both attempts to obtain authorization to sell the property, they
 are bound by the actions taken in each case and cannot challenge them here.

                                                 -20-
No. 72805-9-1/21


       borrower to create a fiduciary duty running from the lender to the
       guarantor.'" [Id, at 833 (quoting Miller. 72 Wn. App. at 426).]

Frontier Bank. 191 Wn. App. at 70 (first alteration in original).

       In sum, the common law duty of good faith does not require Union to

refrain from its rights under the guaranties, as it properly does here. See GMAC
v. Everett Chevrolet. Inc.. 179 Wn. App. 126, 150, 317 P.3d 1074. review denied.

181 Wn.2d 1008(2014).

       Because the guarantors' claims and defenses fail as a matter of law, the
trial court's order granting summary judgment in Union's favor as to its claims

pursuant to the guaranties was proper.

                                           Ill


       Union requests attorney fees on appeal based on the terms ofthe

guaranties.

       In Washington, attorney fees may be awarded for costs of litigation only
when authorized by contract, statute, or recognized ground of equity. Durland v.
San Juan County, 182 Wn.2d 55, 76, 340 P.3d 191 (2014).

        Herein, the guaranties state, "Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including Lender's attorneys' fees and Lender's
legal expenses, incurred in connection with the enforcement of this Guaranty
Costs and expenses include Lender's attorneys' fees and legal expenses ... for
    appeals." Because Union has established a right to the enforcement of the
guaranties, it is entitled to an award of reasonable attorney fees on appeal.
        Accordingly, upon compliance with RAP 18.1, a commissioner of this court
will enter an appropriate order.


                                          -21-
No. 72805-9-1/22



      Affirmed.




We concur:




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                   -22-
